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A  SELECTIVE  MICROFILM  EDITION 

PART  IV 
(1899-1910) 


Thomas  E.  Jeffrey 
Lisa  Gitelman 
Gregory  Jankunis 
David  W.  Hutchings 
Leslie  Fields 


Theresa  M.  Collins 
Gregory  Field 
Aldo  E.  Salerno 
Karen  A.  Detig 
Lorie  Stock 


Robert  Rosenberg 
Director  and  Editor 


Sponsors 

Rutgers,  The  State  University  Of  New  Jersey 
National  Park  Service,  Edison  National  Historic  Site 
New  Jersey  Historical  Commission 
Smithsonian  Institution 


University  Publications  of  America 
Bethesda,  MD 
1999 


Edison  signature  used  with  permission  ofMcGraw-Edison  Company 


Thomas  A.  Edison  Papers 
at 

Rutgers,  The  State  University 
endorsed  by 

National  Historical  Publications  and  Records  Commission 
18  June  1981 

Copyright  ©  1999  by  Rutgers,  The  State  University 

All  ri$its  reserved.  No  part  of  this  publication  including  any  portion  of  the  guide  and  index  or  of 
the  microfilm  may  be  reproduced,  stored  in  a  retrieval  system,  or  transmitted  in  any  form  by  any 
means— graphic,  electronic,  mechanical,  or  chemical,  includingphotocopying,  recorclingor  taping, 
or  information  storage  and  retrieval  systems — without  written  permission  of  Rutgers,  The  State 
University,  New  Brunswick,  New  Jersey. 

The  original  documents  hi  this  edition  are  from  the  archives  at  the  Edison  National  Historic  Site 
at  West  Orange,  New  Jersey. 

ISBN  0-89093-703-6 


THOMAS  A.  EDISON  PAPERS 


Robert  A.  Rosenberg 
Director  and  Editor 

Thomas  E.  Jeffrey 
Associate  Director  and  Coeditor 

Paul  B.  Israel 

Managing  Editor,  Book  Edition 
Helen  Endick 

Assistant  Director  for  Adndnistration 


Associate  Editors 
Theresa  M.  Collins 
Lisa  Gitelman 
Keith  A.  Nier 

Research  Associates 

Gregory  Jankunis 
Lorie  Stock 


Assistant  Editors 
Louis  Carlat 
Aldo  E.  Salerno 


Secretary 
Grace  Kurkowski 


Amy  Cohen 
Bethany  Jankunis 
Laura  Konrad 
Vishal  Nayak 


Student  Assistants 


Jessica  Rosenberg 
Stacey  Saelg 
Wojtek  Szymkowiak 
Matthew  Wosniak 


BOARD  OF  SPONSORS 


Rutgers,  The  State  University  of  New 
Jersey 

Francis  L.  Lawrence 
Josepii  J.  Seneca 
Richard  F.  Foley 
David  M.  Osliinsky 
New  Jersey  Historical  Commission 
Howard  L.  Green 


National  Park  Service 
John  Maounis 
Maryanne  Gerbauckas 
Roger  Durham 
George  Tselos 
Smithsonian  Institution 
Bernard  Finn 
Arthur  P.  Molella 


EDITORIAL  ADVISORY  BOARD 

James  Brittain,  Georgia  Institute  of  Technology 
R.  Frank  Colson,  University  of  Southampton 
Louis  Galambos,  Johns  Hopkins  University 
Susan  Hockey,  University  of  Alberta 
Thomas  Parke  Hughes,  University  of  Pennsylvania 
Peter  Robinson,  Oxford  University 

Philip  Scranton,  Georgia  Institute  of  Technology/Hagley  Museum  and  Library 
Merritt  Roe  Smith,  Massachusetts  Institute  of  Technology 


FINANCIAL  CONTRIBUTORS 


PRIVATE  FOUNDATIONS 
The  Alfred  P.  Sloan  Foundation 
Charles  Edison  Fund 
The  Hyde  and  Watson  Foundation 
National  Trust  for  the  Humanities 
Geraldine  R.  Dodge  Foundation 


PUBLIC  FOUNDATIONS 
National  Science  Foundation 
National  Endowment  for  the 
Humanities 

National  Historical  Publications  and 
Records  Commission 


PRIVATE  CORPORATIONS  AND  INDIVIDUALS 


Alabama  Power  Company 

Anonymous 

AT&T 

Atlantic  Electric 

Association  of  Edison  Illuminating 
Companies 

Battelle  Memorial  Institute 
The  Boston  Edison  Foundation 
Cabot  Corporation  Foundation,  Inc. 
Carolina  Power  &  Light  Company 
Consolidated  Edison  Company  of  New 
York,  Inc. 

Consumers  Power  Company 
Cooper  Industries 
Corning  Incorporated 
Duke  Power  Company 
Entergy  Corporation  (Middle  South 
Electric  System) 

Exxon  Corporation 

Florida  Power  &  Light  Company 

General  Electric  Foundation 

Gould  Inc.  Foundation 

Gulf  States  Utilities  Company 

David  and  Nina  Heitz 

Hess  Foundation,  Inc. 

Idaho  Power  Company 


IMO  Industries 

International  Brotherhood  of  Electrical 
Workers 

Mr.  and  Mrs.  Stanley  H.  Katz 
Matsushita  Electric  Industrial  Co.,  Ltd. 
Midwest  Resources,  Inc. 

Minnesota  Power 
New  Jersey  Bell 
New  York  State  Electric  &  Gas 
Corporation 

North  American  Philips  Corporation 
Philadelphia  Electric  Company 
Philips  Lighting  B.V. 

Public  Service  Electric  and  Gas  Company 

RCA  Corporation 

Robert  Bosch  GmbH 

Rochester  Gas  and  Electric  Corporation 

San  Diego  Gas  and  Electric 

Savamioh  Electric  and  Power  Company 

Schering-Plough  Foundation 

Texas  Utilities  Company 

Thomas  &  Betts  Corporation 

Thomson  Grand  Public 

Transamerica  Delava]  Inc. 

Westinghouse  Foundation 
Wisconsin  Public  Service  Corporation 


4- 


A  Note  on  the  Sources 

The  pages  which  have  been 
filmed  are  the  best  copies 
available.  Every  technical 
effort  possible  has  been 
made  to  ensure  legibility. 


PUBLICATION  AND  MICROFILM 
COPYING  RESTRICTIONS 


Reel  duplication  of  the  whole  or  of 
any  part  of  this  film  is  prohibited 
In  lieu  of  transcripts,  however, 
enlarged  photocopies  of  selected 
items  contained  on  these  reels 
may  be  made  in  order  to  facilitate 
research. 


Legal  Department  Records 
Motion  Pictures  -  Case  Files 

Greater  New  York  Film  Rental  Company  v. 

Motion  Picture  Patents  Company  et  al. 

Greater  New  York  Film  Rental  Company  v. 

General  Film  Company  et  al. 

This  folder  contains  material  pertaining  to  suits  brought  by  the  Greater 
New  York  Film  Rental  Co.  against  the  Motion  Picture  Patents  Co.  (MPPCo) 
and  the  General  Film  Co.  in  the  State  of  New  York  and  in  the  federal  courts. 
Other  defendants  included  Thomas  A.  Edison,  Inc.,  the  Edison  Manufacturing 
Co.,  the  American  Mutoscope  &  Biograph  Co.,  and  other  manufacturers 
licensed  by  MPPCo.  The  cases  were  initiated  in  191 1  and  1914  and  involved 
disputes  over  licenses  and  allegations  of  monopoly  against  MPPCo  and  the 
General  Film  Co.  The  selected  items  are  primarily  from  a  printed  record  in  the 
state  case:  Summons,  Complaint,  Affidavits,  Injunction  and  Order  to  Show 
Cause.  Several  pages  bear  marginal  notations  by  Edison.  Also  included  are  a 
few  letters  regarding  the  eventual  settlement  of  the  federal  suit  by  decree  in 
1916.  Among  the  items  not  selected  are  writs  and  pleadings;  correspondence 
relating  to  legal  fees  and  the  progress  of  litigation;  and  other  letters  to  and  from 
the  defendant  companies. 


Supreme  Court  of  the  State  of  New  York, 

NEW  YORK  COUNTY. 


Plaintiff,  ■ 


Motion  Picture  Patents  Company  and  others, 

Defendants. 


SUMMONS,  COMPLAINT,  AFFIDAVITS,  ( 

INJUNCTION  AND  ORDER  ' 

TO  SHOW  CAUSE.  ■  * 


INDEX. 


Injunction  Order  ’  and  Order,  to  Show 


Cause .  1 

Summons .  5 

Complaint  and  Verification  and  Exhibit  A.  7-57 

Affidavit  of  William  Fox .  58 

Affidavit  of  Louis  Rosenbluh  .  91 

Affidavit  of  William  H.  Swanson .  98 

Affidavit  of  James  J.  Lodge .  Ill 

Affidavit  of  Abraham  Carlos . . .  117 

Affidavit  of  Samuel  P.  Weissmann .  121 

Affidavit  of  Gustavus  A.  Rogers .  124 


Supreme  Court  of  the  State  of  New  York, 

NEW  YORK  COUNTY. 


Greater  New  York  Film  Rental 
Company, 

Plaintiff, 

against 

Motion  Picture  Patents  Com¬ 
pany,  General  Film  Company, 
American  Mutoscopo  &  Bio- 
graph  Company,  Edison  Man¬ 
ufacturing  Company,  Essanay 
Film  Manufacturing  Com¬ 
pany,  Kalem  Company,  George 
Kloine,  Lubin  Manufacturing 
Company,  Patlie  Frercs,  Selig 
Polyscope  Company,  Vita- 
graph  Company  of  America, 
and  Melies  Manufacturing 
Company, 

Defendants. 


It  appearing  to  my  satisfaction,  by  the  annexed 
complaint,  verified  December  1G,  1911,  and  by  the 
annexed  affidavits  of  William  Fox,  verified  on  the 
same  day,  James  J.  Lodge,  verified  December  15, 
I  fill,  William  II.  Swanson,  Louis  Rosenbluh,  Ab- 


(Injunction  Order  and  Order  to  Show  Cause.) 

mlinm  Carlos  and  Sanniol  P.  lYeissionmi  eaoli 
verified  on  tho  same  day,  and  Gustavus  A.  Rogers, 
verified  December  10, 1011,  that  the  plaintiff  prays 
for  and  is  entitled  to  judgment  against  the  de¬ 
fendants,  restraining  the  commission  of  the  acts 
hereinafter  enjoined,  and  that  the  commission  of 
such  acts  during  tho  pendency  of  this  action 
would  produce  irreparable  injury  to  tho  plain¬ 
tiff,  and  render  the  judgment  ineffectual;  and 
that  the  defendants,  during  the  pendency  of  this 
action,  are  doing  and  procuring  and  suffering  to 
be  done,  and  threaten  and  are  about  to  do  and 
procure  and  suffer  to  be  done,  the  acts  hereinaf¬ 
ter  mentioned,  in  violation  of  tho  plaintiff’s 
rights  respecting  tho  subject  of  tho  action,  and 
tending  to  render  tho  judgment  ineffectual,  such 
acts  consisting  of  an  attempted  cancellation  of 
the  plaintiff’s  license  and  of  intended  and  threat¬ 
ened  discontinuance  of  the  supply  of  motion  pic¬ 
ture  films  to  the  plaintiff’,  which  it  1ms  heretofore 
received  and  is  entitled  to  receive,  and  of  inter¬ 
ference  and  threatened  interference  with  the 
plaintiff’s  business  and  customers,  tending  to  the 
destruction  of  the  plaintiff’s  business;  and  that 
the  plaintiff  is  entitled  to  an  injunction  restrain¬ 
ing  the  cancellation  of  his  license  and  the  impair¬ 
ment  or  discontinuance  of  the  aforesaid  service 
to  the  plaintiff,  and  all  interference  with  its  busi 
ness  and  customers  upon  the  grounds  that 
the  plaintiff  is  entitled,  both  by  virtue  of 
its  license  and  tho  other  contracts  sot  forth 
f  ,  tlle  „  complaint,  and  by  virtue  of  the 
facts  alleged  m  the  complaint  and  accom¬ 
panying  affidavits,  to  receive  from  the  defend¬ 
ants,  pursuant  to  the  duty  resting  upon  them  and 
arising  out  of  the  facts  sot  forth,  continued  un¬ 


( Injunction  Order  and  Order  to  Show  Cause.) 


impaired  and  efficient  service,  as  heretofore,  of 
motion  picture  films;  and  that  the  defendants 
threaten  and  are  about  to  interfere  with  and  cut 
off  tho  plaintiff’s  supply  of  such  films,  and  other¬ 
wise  to  interfere  with  and  destroy  the  plaintiff’s 
business;  and  that  tho  plaintiff  has  no  adequate 
remedy  at  law,  and  is  without  other  remedy  than 
tho  injunction  prayed  for  in  the  complaint;  and 
tho. plaintiff  having  given  the  security  provided 
bylaw; 

Now,  on  motion  of  Rogers  &  Rogers,  attorneys 
for  the  plaintiff; 

It  is  obdkhed,  that  the  defendants,  and  each  of 
them,  and  their  and  each  of  their  officers,  direc¬ 
tors,  attorneys,  agents  and  servants,  bo  and  they 
hereby  are  enjoined  and  restrained,  until  tho  fur¬ 
ther  order  of  this  Court,  from  interfering  with 
tho  plaintiff’s  business,  or  from  discriminating 
against  it,  or  from  ceasing  to  supply  the  plaintiff',  . 
without  delay  or  discrimination,  with  motion  pic¬ 
ture  films  produced  by  tho  defendants  designated 
as  licensed  manufacturers,  respectively,  upon  the 
plaintiff’s  orders,  upon  tho  plaintiff’s  paying  for 
such  films  and  continuing  to  perform  the  condi¬ 
tions  of  its  license,  Exhibit  A,  and  from  in  any 
wise  altering,  to  the  plaintiff’s  prejudice,  in  com¬ 
pleteness  and  promptness  of .  service,  or  other¬ 
wise,  the  methods  of  business  heretofore  and  now 
prevailing  between  the  plaintiff  and  the  defend¬ 
ants  designated  as  licensed  manufacturers;  from 
taking  from  tho  plaintiff’s  possession  or  that  of 
any  customer  or  exhibitor,  or  in  any  wise  inter¬ 
fering  with,  by  means  of  actions  of  replevin,  or 
otherwise,  any  of  tho  film  possessed  by  the  plain¬ 
tiff;  from  interfering  with  the  plaintiff’s  busi- 


4 

( Injunction  Order  and  Order  to  Show  Cause.) 

uoss  oi'  customers,  and  from  attempting  to  alien¬ 
ate  or  entice  said  customers  from  the  plaintiff; 
and  from  cancelling  or  attempting  to  cancel  the 
plaintiff’s  license,  Exhibit  A,  or  from  in  any  wise 
interfering  with  the  plaintiff’s  business,  or  from 
requiring  or  inducing  the  defendants  designated 
as  licensed  manufacturers,  or  any  of  them,  to 
cut  off,  limit,  or  in  any  wise  make  less  efiiciont  than 
heretofore,  the  supply  of  films 'by  said  licensed 
manufacturers,  respectively,  to  the  plaintiff,  or 
from  in  any  wise  interfering  with  the  business 
relations  hitherto  and  now  existing  between  the 
plaintiff  and  said  licensed  manutaetnrors. 

The  plaintiff  is  hereby  given  leave  to  servo 
additional  papers  in  support  of  its  motion  to 
continue  this  injunction  pendente  tile,  on  or  be¬ 
fore  December  19,  1911. 

Lot  the  defendants  show  cause  at  a  Speciul 
Term,  Part  I,  of  this  Court,  appointed  to  bo  hold 
at  the  New  York  County  Court  House  in  the 
Borough  of  Manhattan,  City  of  New  York,  on  the 
20  day  of  December,  1911,  at  the  opening  of 
Court  on  that  day,  or  as  soon  thereafter  as  coun¬ 
sel  can  be  heard,  why  a  rule  or  order  should 
not  bo  made  continuing  this  injunction  dur¬ 
ing  the  pendency  of  this  action ;  mid  why  the  plain¬ 
tiff  should  not  have  such  other,  further  or  differ¬ 
ent  relief  as  may  seem  good  to  the  Court. 

Let  a  copy  of  the  summons  and  complaint  hero¬ 
in  and  of  the  aforosuid  affidavits,  together  with 
»  copy  of  this  order,  ho  served  upon  the  defend¬ 
ants  not  later  than  December  18,  1911;  and  such 
service  shall  he  sufficient. 

December  16,  1911. 

John  Ford, 

Justice  Supreme  Court. 


SUPREME  COURT  OP  THE  STATE  OP 
NEW  YORK, 


NEW  Y011K  COUNTY. 


Q  iieateb  New  York  Film  Rental 
Company, 

Plaintiff', 

against 

Motion  Picture  Patents  Com¬ 
pany,  General  Film  Company, 

American  Mutoscope  &  Bio-  *4 

graph  Company-,  Edison  Manu¬ 
facturing  Company,  Essanay  Summons. 

Film  Manufacturing  Com¬ 
pany,  Kalem  Company, 

George  Kleine,  Ludin  Manu¬ 
facturing  Company,  Patiie  ' 

Freiies,  Selio  Polyscope  Com¬ 
pany,  Vitagrapii  Company  of 
America  and  Melies  Manu¬ 
facturing  Company, 

Defendants. 


To  the  above-named  Defendants: 

You  are  hereby  summoned  to  answer  the  com¬ 
plaint  in  this  action,  and  to  serve  a  copy  of  your 
answer  on  the  plaintiff’s  attorneys  within  twenty- 
days  after  the  service  of  this  summons,  exclusive 
of  the  day  of  service ;  and  in  case  of  your  failure 
to  appear  or  answer,  judgment  will  be  taken 


I 


(Summons.) 

against  you  by  default,  for  the  relief  demanded 
in  the  complaint. 

Trial  desired  in  New  York  County. 

Dated,  New  York,  December  16,  1911. 

Rogers  &  Rogers, 

Attorneys  for  Plaintiff, 

Office  and  Post  Office  Address : 

No.  160  Broadway, 
Borough  of  Manhattan, 

New  York  City. 


1 


7 

SUPREME  COURT  OF  THE  STATE  OF 
NEW  YORK. 


New  York  County. 


Greater  New  York  Film  Rental 
Company, 

Plaintiff, 

against 

Motion  Picture  Patents  Com¬ 
pany,  General  Film  Company, 
American  Mutoscope  &  Bio- 
graph  Company,  Edison  Manu- 
pacturinq  Company,  Essanay 
Film  Manufacturing  Com¬ 
pany,  Kalem  Company’, 
George  Kleine,  Lurin  Manu¬ 
facturing  Company',  Patiie 
Freres,  Selig  Polyscope  Com¬ 
pany,  Vitagraph  Company  of 
America  and  Mislies  Manu¬ 
facturing  Company, 

Defendants. 


The  plaintiff,  by  Rogers  &  Rogers,  its  attorneys, 
complains  of  the  defendants,  and  alleges  as  fol- 

First:  The  plaintiff  is,  and  since  March,  1907, 
has  been,  a  domestic  corporation,  having  its  office 
and  principal  place  of  business  in  the  Borough  of 
Manhattan,  City  of  New  York,  and  engaged  as  a 
rental  agency  in  leasing  to  exhibitors  in  said  City 
of  New  York  and  elsewhere  in  the  State  of  New 


8 

( Complaint ,) 

York,  and  in  the  States  of  New  Jersey,  Con¬ 
necticut  and  Massachusetts,  motion  picture  films 
for  use  in  projecting  machines,  togetkor  with 
such  projecting  machines  and  appliances,  for' 
the  purpose  of  enabling  exhibitors  to  give 
motion  picture  exhibitions  in  the  manner  here¬ 
inafter  more  fully  described.  The  term  “rental 
agency,”  as  herein  used,  moans  nn  individual, 
partnership  or  corporation,  which,  since  the  or¬ 
ganisation  of  the  defendant  Motion  Picturo  Pat¬ 
ents  Company  in  or  about  December,  1908,  after 
first  obtaining  a  license  from  said  Patents  Com¬ 
pany,  leases  motion  picturo  films  from  certain 
manufacturers  (hereinafter  referred  to  ns  licensed 
manufacturers)  licensed  by  said  Patents  Com¬ 
pany  and  operating  by  virtue  of  such  licenses 
under  the  patents  owned  by  said  Patents  Com¬ 
pany,  and  hereinafter  more  fully  described,  and 
in  turn  sub-lets  such  films,  together  with  project¬ 
ing  machines  and  appliances  purchased  from  vari¬ 
ous  sources,  such  machines  being  first  licensed 
by  said  Pntents  Company,  to  exhibitors  who  are 
licensed  by  said  Patents  Company,  for  the  pur¬ 
pose  of  enabling  the  exhibitors  to  give  public  ex¬ 
hibitions  of  motion  pictures. 

Second:  Th0  defendant  Motion  Picture  Pat¬ 
ents  Company  (hereinafter  referred  to  as  the 
Patents  Company)  is,  and  since  about  December, 
1JUS,  lias  been,  a  foreign  corporation,  organized 
and  existing  under  and  pursuant  to  the  laws  of 
the  State  of  New  Jersey,  and  having  its  office  and 
principal  place  of  business  in  the  Borough  of 
Manhattan,  City  of  New  York.  It  is  the  owner 
ot  all  the  patents  hereinafter  described  for  motion 
picture  films,  cameras  and  parts  thereof,  and 


( Complaint ,) 


projecting  machines  and  parts  thereof,  and  is, 
and -ever  since  its  organization  lias  been,  engaged 
in  licensing  certain  manufacturers  to  make  such 
films  under  said  patents,  and  also  to  import  films 
from  foreign  countries,  and  in  licensing  other 
manufacturers  to  construct  projecting  machines, 
and  in  licensing  film  rental  agencies,  which  by 
means  of  such  licenses  are  enabled  to  obtain  films 
from  said  licensed  manufacturers. 

(a)  The  defendant  General  Film  Company  is, 
and  since  April  21,  1910,  has  been,  a  foreign  cor¬ 
poration,  organized  and  existing  under  and  pur¬ 
suant  to  the  laws  of  the  State  of  Maine,  and  hav¬ 
ing  its  principal  office  and  place  of  business,  in  the 
Borough  of  Manhattan,  City  of  New  York.  It  ib, 
and  since  its  organization  has  been,  engaged  in 
business  as  a  rental  ageney,  holding  a  license  ns 
such  agency  from  said  Pntents  Company,  and 
leasing  motion  picture  films  from  the  aforesaid 
licensed  manufacturers,  and  in  turn  leasing  such 
films,  together  with  projecting  machines  and  ap¬ 
pliances,  to  exhibitors  in  the  State  of  New  York 
and  elsewhere  and  throughout  the  United  States 
and  Canada. 

(b)  The  defendant  American  Mutoscope  &  Bio¬ 
graph  Company  is,  and  at  all  times  hereinafter 
mentioned  was,  a  foreign '-corporation,  organized 
and  existing  under  and  pursuant  to  the  laws  of 
the  State  of  New  Jersey,  and  having  its  office  and 
principal  place  of  business  in  the  Borough  of  Man¬ 
hattan,  City  of  New  York,  and  engaged  as  one 
of  the  aforesaid  licensed  manufacturers,  holding 
a  license  from  said  Patents  Company,  in  manu¬ 
facturing  motion  picture  films,  and  in  leasing 


10 


28  ( Complaint .) 

the  same  to  licensed  rental  agencies  in  the  State 
oi'  New  York  and  elsewhere  and  throughout -the 
United  States  and  Canada. 

(c)  The  defendant  Edison  Manufacturing  Com¬ 
pany  is,  and  at  all  times  hereinafter  mentioned 
has  boon,  a  foreign  corporation,  organized  and 
existing  under  and  pursuant  to  the  laws  of  the 
State  of  Now  Jersey,  and  having  an  office  and 
carrying  on  business  in  the  Borough  of  Manhat¬ 
tan,  City  of  New  York,  and  engaged,  among  other 

29  things,  as  one  of  the  aforesaid  licensed  manufac¬ 
turers,  holding  a  license  from  said  Patents  Com¬ 
pany,  in  manufacturing  and  leasing  motion  pic¬ 
ture  films  to  licensed  rental  agencies  in  tho  State 
of  New  York  and  elsewhere  and  throughout  the 
United  States  and  Canada. 

W  The  defendant  Essanay  Film  Manufactur¬ 
ing  Company  is,  and  at  all  times  hereinafter 
mentioned  has  been,  a  foreign  corporation,  or¬ 
ganized  and  existing  under  and  pursuant  to  the 
laws  of  the  State  of  Illinois,  and  engaged, 
since  December,  1908,  as  one  of  the  afore- 
3  said  licensed  manufacturers,  holding  a  li¬ 
cense  from  said  Patents  Company,  in  manufac¬ 
turing  and  leasing  motion  picture  films  to  licensed 
rental  agencies  in  the  State  of  New  York  and 
elsewhere  and  throughout  the  United  'States  and 
Canada. 

(e)  The  defendant  Kalem  Company  is,  and  at 
all  times  hereinafter  mentioned  has  been,  a  do-  . 
mestic  corporation,  engaged,  since  December, 
1908,  as  one  of  the  aforesaid  licensed  manufactur¬ 
ers,  holding  a  license  from  said  Patents  Company, 


(Complaint.)  31 

in  manufacturing  and  leasing  motion  picture  films 
to  licensed  rental  agencies  in  tho  State  of  New 
York  and  elsewhere  and  throughout  the  United 
Slates  and  Canada. 

(/)  Tho  defendant  George  Kloine  is,  and  since 
December,  1908,  has  been,  one  of  the  licensed  man¬ 
ufacturers  aforesaid,  holding  a  license  from  said 
Patents  Company,  and  engaged  in  importing  and 
leasing  motion  picture  films  to  licensed  rental 
agencies  in  the  State  of  New  York  and  elsewhere 
and  throughout  the  United  States  and  Canada.  32 

(ff)  The  defendant  Lubin  Manufacturing  Com¬ 
pany  is,  and  at  all  times  hereinafter  mentioned 
has  been,  a  foreign  corporation,  organized  and 
existing  under  and  pursuant  to  the  laws  of  the 
State  of  Pennsylvania,  and  engaged,  since  Decem¬ 
ber,  1908,  as  one  of  the  aforesaid  licensed  manu¬ 
facturers,  holding  a  license  from  said  Patents 
Company,  in  manufacturing  and  leasing  motion 
picture  films  to  licensed  rental  agencies  in  the 
State  of  Now  York  and  elsewhere  and  throughout 
the  United  States  and  Canada. 

33 

(h)  The  defendant  Pathe  Freres  is,  and  at  all 
times  hereinafter  mentioned  has  been,  a  foreign 
corporation,  organized  and  existing  under  and 
pursuant  to  the  laws  of  the  State  of  New  Jersey, 
having  an  office  and  carrying  on  business  in  the 
Borough  of  Manhattan,  City  of  Now  York,  and 
engaged,  since  December,  1908,  as  one  of  the 
aforesaid  licensed  manufacturers,  holding  a  li¬ 
cense  from  said  Patents  Company,  in  manufac¬ 
turing  and  leasing  motion  picture  films  to  -licensed 
rental  agencies  in  the  State  of  New  York  and 


12 


13 


34  ( Complaint .) 

elsewhere  and  throughout  the  United  States  and 
Canada. 

(i)  The  defendant  Selig  Polyscope  Company  is, 
and  at  all  times  hereinafter  mentioned  has  been, 
u  foreign  corporation,  organized  and  existing  un¬ 
der  and  pursuant  to  the  laws  of  the  State  of  Illi¬ 
nois,  and  engaged,  since  Decembor,  1908,  as  one 
of  the  aforesaid  licensed  manufacturers,  holding  a 
license  from  said  Patents  Company,  in  manufac¬ 
turing  and  leasing  motion  picture  films  to  licensed 

35  rental  agencies  in  the  State  of  New  York  and  else¬ 
where  and  throughout  the  United  States  and 
Canada. 

U)  The  defendant  Vitagraph  Company  of 
America  is,  and  at  all  times  hereinafter  mentioned 
has  been,  a  domestic  corporation,  and  engaged, 
since  December,  1908,  as  one  of  the  aforesaid  li¬ 
censed  manufacturers,  holding  a  license  from  said 
Patents  Company,  in  manufacturing  and  leasing 
motion  picture  films  to  licensed  rental  agencies  in 
the  State  of  New  York  and  elsewhere  and  through¬ 
out  the  United  States  and  Canada. 

36 

(k)  The  defendant  Melies  Manufacturing  Com¬ 
pany  is,  and  since  about  July,  1910,  has  been,  a 
domestic  corporation,  and  engaged  as  one  of  the 
aforesaid  licensed  manufacturers  holding  a  license 
from  said  Patents  Company,  in  manufacturing 
and  leasing  motion  picture  films  to  licensed  rental 
agencies  in  the  State  of  New  York  and  elsewhere 
throughout  the  United  States  and  Canada. 

(l)  All  of  the  aforesaid  defendants,  except  Mo¬ 
tion  Picture  Patents  Company  and  General  Film 


( Complaint .)  ^ . 

Company,  are  heroin  collectively  referred  to  as 
the  licensed  manufacturers. 

Tuimi:  The  business  of  manufacturing  films 
and;  projecting  machines  for  tile  purpose  of  ex¬ 
hibiting  motion  pictures  lias,  during  a  period  of 
about  ten  years  past,  become  one  of  great  extent; 
and  importance  in  the  United  States  and  Canada 
and  in  foreign  countries,  and  during  the  pastfour 
or  five  years  has  developed  to  vast  proportions, 
involving  tlie  investment  of  many  millions  of  dol¬ 
lars.  Every  city  and’  village  and  almost  every  38- 
hamlet  in  tlie  land  has  moving  picture  shows, 
which  linvo  proved  a  means  of  amusement,  recrea¬ 
tion  and  education  at  small  cost  to  grout  numbers 
of  people.  Such  shows  are  constantly  increasing 
in  popularity,  and  new  theatres  and  other  places 
of  entertainment,  for  the  purpose  of  showing  such 
pictures,  are  constantly  being  established  through¬ 
out  the  United  States.  Such  exhibitions  have 
also  proved  of  groat  value  for  educational  pur¬ 
poses,  and  are  used  in  schools  and  colleges,  and 
the  photographing  of  moving  objects  upon  the 
films  hereinafter  described  has  proved  valuable  in 
■scientific  research,  and  is  being  increasingly  used  39 
for  such  purposes. 

Foturnr:  Prior  to  December,  1908,  when  the 
Patents  Company  was  organized,,  letters  patent 
of  the  United  States,  covering  cameras,  with  which 
moving,  pictures  wore  taken,  and  the  negative 
films  upon  which  the  photographs  wore  made,  and 
the  positive  films  to  which  tho  pictures  wore  trans¬ 
ferred,  and  the  projecting  machines  by  means  of 
which  the  pictures  upon  the  films  wore  magnified 
and  thrown  upon  screens,  and  relating  generally 


u  \ 

40  (Complaint.)  * 

to  improvements  in  tilts  motion  picture  urt,  wore  J 

owned  and  controlled  by  tliree  of  tlie  defendants  $ 

hereinbefore  described  as  licensed  manufacturers  | 

to  wit :  The  Edison  Manufacturing  Company,  the  | 

American  Mutoscope  and  Biogrnph  Company,  and  1 

the  Vitagraph  Company  of  America,  and  by  tlie  J 

Armat  Moving  Picture  Machine  Company.  Said  1 

owners,  and  other  of  the  licensed  manufacturers  d 

operating  under  licenses,  manufactured  and  sold  !j 

apparatus  and  films  covered  by  said  patents,  and  j 

still  other  of  the  defendant  manufacturers  disre-  | 

41  garded  and  denied  the  validity  of  said  patents  J 

and  carried  on  business  despite  them.  \ 

(a)  The  patents  so  owned  and  controlled  by  I 

said  defendants  and  said  Armat  Company  were  I 

the  following: 

No.  578185,  dated  March  2,  1807,  for  Vitnscopo,  ! 

granted  to  Thomas  Armat;  ; 

No.  580749,  dated  April  13,  1807,  for  Vitascope,  | 

granted  to  Thomas  Armat; 

No.  58G053,  dated  July  20,  1897,  for  Phan-  ; 

toscopo,  granted  to  Charles  F.  Jenkins  and 

42  Thomas  Armat; 

No.-  58801(5,  dated  August  24,  1897,  for  Nine-  i 

toseopo  granted  to  Charles  M.  Campbell,  as  as-  I 

signee  of  Willard  G.  Steward  and  Ellis  F.  Frost;  | 

No.  G73320,  dated  April  30,  1901,  for  Kino- 
toscoiio,  granted  to  the  American  Vitagraph.  Com-  I 

pany,  ns  assignee  of  Albert  E.  Smith ;  I; 

No.  673992,  dated  May  14,  1901,  for  Vitascope,  I 

granted  to  Thomas  Armat ; 

No.  707934,  dated  August  2G,  1902,  for  Project-  1 

ing  ICinetoscope,  granted  to  E.  &  H.  T.  Anthony  l| 

&  Co.,  as  assignees  of  AVoodville  Latham ;  | 


15 

( Complaint .)  ^ 

No.  722382,  dated  March  10,  1903,  for  Animated 
Picture  Apparatus,  granted  to  American  Mutos¬ 
cope  &  Biograph  Co.,  as  assignee  of  John  A. 
Pross ; 

No.  744251,  .dated  November  17,  1903,  for  Kino- 
loscopo,  granted  to  Albert  E.  Smith ; 

No.  770937J  dated  September  27,  1904,  for  Kine- 
toscopo,  granted  to  the  Vitagraph  Company  of 
America,  ns  assignee  of  Albert  E.  Smith; 

No.  771280,  dated  October  4,  1904,  for  Winding 
Reel,  granted  to  Albert  E.  Smith ; 

No.  785205,  dated  March  21,  1905,  for  Flame-  44 
Shield  for  Kinetoseopo,  granted  to  the  Vitagraph 
Company  of  America,  as  assignee  of  William  Ell- 
wood  ; 

No.  785237,  dated  March  21,  .1905,  for  Film- 
Holder  for  Kinetoscope,  granted  to  the  Vitagraph 
Company  of  America,  as  assignee  of  Albert  E. 
Smith ; 

Reissued  letters  patent  Nos.  12037  and  12038, 
dated  September  30,  1902,  issued  to  Thomas  A. 
Edison,  in  place  of  original  letters  patent  No. 
5891G8,  dated  August  31,  1897,  issued  to  said 
Thomas  A.  Edison,  for  a  new  and  useful  improve¬ 
ment  in  Kinetoscopic  cameras;  45 

Reissued  letters  patent  No.  12192,  dated  Jan¬ 
uary  12,  1904,  issued  to  Thomas  A.  Edison,  in 
place  of  original  letters  patent  No.  589168,  dated 
August  31, 1897,  issued  to  said  Thomas  A.  Edison, 
for  Kinetoscopic  film. 

(5)  Each  of  the  aforesaid  patents  was  granted 
for  the  term  of  seventeen  years  from  the  date  of 
issue  of  the  original  patent;  and  the  plaintiff  al¬ 
leges,  upon  information  and  belief,  that  said  pat¬ 
ents  collectivoly  embraced  the  entire  art  of  photo- 


1G 

46  ( Complaint .) 

'  graphing  moving  objects,  tile  cameras  with  which 
such  photographs  were  lukcn,  the  films  upon 
which  photographs  wore  made,  and  those  to  which 
they  wore  transferred,  and  the  projecting  ma¬ 
chines  and  appliances  by  means  of  which  the  pic¬ 
tures  were  shown. 

Firm :  Prior  to  the  organization  of  the  Patents. 
Company  in  December,  1908,  the  defendants  here¬ 
in  designated  as  licensed  manufacturers  carried 
on  their  business  independently,  each  competing 
47  with  all  of  the  others  in  the  manufacture  and  sale 
of  their  aforesaid  products,  and  there  was  actual 
and  active  competition  throughout  the  United 
States  among  all  of  said  defendants.  During  suid. 
period  of  competition,  said  defendants  sold  their 
products,  and  particularly  their  films,  outright  to 
concerns  like  the  rental  agencies  hereinbefore  de¬ 
scribed,  which  in  turn  leasod  the  apparatus  and 
films  purchased  by  them  to  exhibitors  throughout 
the  United  States  and  Canada.  Said  defendants 
designated  as  licensed  manufacturers,  also,  during 
said  period  of  competition,  imported  from  foreign 
48  countries  largo  quantities  of  film  there  manufac¬ 
tured,  and  sold  the  same  to  such  rental  agencies 
for  distribution  by  lease  to  exhibitors  throughout 
the  United  States.  Said  rental  agencies  purchas¬ 
ed  outright,  and  became  the  absolute  owners  of, 
the  film  sold  to  them  by  said  defendants  desig¬ 
nated  as  licensed  manufacturers. 

(a)  The  apparatus  and  films  were  manufactur¬ 
ed  and  sold  by  the  manufacturers  in  various 
states,  to  wit:  New  York,  Pennsylvania,  Illinois, 
and  other  states,  and  such  films  wore  also  import¬ 
ed  into  the  United  States  from  foreign  countries; 


17 

(Complaint.)  4, 

and  all  such  films,  domestic  and  foreign,  were  sold 
in  and  transported  to  all  the  States  and  Territories 
of  the  United  States,  and  into  the  Dominion  of 
Canada;  and  the  sale  and  transportation  thereof 
constituted  interstate  and  foreign  commerce. 

( b )  The  rental  agencies  leased  such  apparatus 
and  films  to  exhibitors  in  all  the  States  and  Terri¬ 
tories  and  in  Canada;  and  such  leasing  and  the 
transportation  of  such  apparatus  and  films  con¬ 
stituted  interstate  and  foreign  commerce. 

50 

(c)  During  said  period  of  competition,  a  large 
number  of  sucli  rental  agencies,  as  aforesaid  (ex¬ 
cept  that  they  were  free  and  independent  and 
not  licensed  or  subject  to  control),  was  es¬ 
tablished  throughout  the  United  States,  carry¬ 
ing  on  business  ns  hereinbefore  described ;  and,  in 
the  Borough  of  Manhattan,  City  of  Now  York, 
down  to  the  spring  of  1909,  when  the  defendant 
Patents  Company  was  in  active  operation,  there, 
were  upwards  of  twenty  such  rental  agencies  ac¬ 
tively  competing  with  one  another  for  the  busi¬ 
ness  of  leasing  apparatus  and  films  to  exhibitors 

in  the  City  of  New  York  and  vicinity,  and  else-  5 1 
where  in  the  State  of  New  York  and  in  the  United 
States. 

(d)  The  result  of  the  aforesaid  competition 
among  the  defendants  designated  as  licensed 
manufacturers  was  to  improve  the  product  of  the 
manufacturers  and  to  keep  down  the  cost  thereof 
to  the  rental  agencies;  and  the  effect  of  the  com 
petition  among  the  rental  agencies  was  to  im¬ 
prove  the  service  given  and  keep  down  the  cost 
to  the  exhibitors. 


18 

52  ( Complaint .) 

Sixth  :  In  December,  1908,  the  defendant  Pat¬ 
ents  Company  was  organized,  ns  aforesaid,  for 
the  purpose  of  stifling  and  suppressing  tile  exist¬ 
ing  competition  among  the  manufacturers  heroin 
designated  ns  licensed  manufacturers,  and  to 
combine  said  licensed  manufacturers  into  or  sub¬ 
ject  them  to  the  control  of  a  single  corporation, 
which  should  acquire  the  ownership  of  all  of  tho 
aforesaid  letters  patent;  and  with  the  ultimate  ob¬ 
ject  of  extinguishing,  also,  competition  among  the 
aforesaid  rental  agencies  throughout  the  United 

53  States,  and  driving  said  rental  agencies  out  of 
business,  and  bringing  the  entire  business  of  fur¬ 
nishing  apparatus  and  films  to  exhibitors  within 
the  grasp  of  said  Patents  Company  and  those  in¬ 
terested  therein  and  who  had  brought  about  its 
organization. 

Sbvbntii  :  Immediately  after  tho  organization 
of  tho  Patents  Company,  all  of  the  aforesaid  let¬ 
ters  patent  were  assigned  to  it  by  the  respective 
owners  thereof,  and  said  Patents  Company  tlierc- 


( Complaint .) 


tare  and  sale  of  the  aforesaid  apparatus  and  films 
and  in  intrastate  and  interstate  and  foreign  trade 
aud  commerce  therein,  and,  pursuant  to  tho 
agreement  then  aud  there  made,  of  some  of  the 
details  of  which  tho  plaintiff  is  not  informed,  all 
of  the  aforesaid  letters  patent  were  assigned  ami 
transferred  to  said  Patents  Company,  and  each 
of  said  licensed  manufacturers  entered  into  a  li¬ 
cense  agreement  with  said  Patents  Company,  by 
which  each  of  said  licensed  manufacturers  cove¬ 
nanted  and  agreed  only  to  lease,  and  not  to  sell, 
in  the  United  States  or  its  territories  or  posses-  56 
sions  (except  its  insular  possessions  and  Alaska), 
motion  picture  films  manufactured  or  imported  by 
said  licensed  manufacturers,  respectively,  of  a 
width  greater  than  approximately  one  inch,  and 
under  the  condition  and  restriction  that  said 
films  should  bo  used  only  on  exhibiting  and  pro¬ 
jecting  machines  licensed  by  said  Patents  Com¬ 
pany  under  letters  patent  owned  by  it. 

(b)  The  motion  picture  films  theretofore  aud 
since  manuf  1 11  cd  I  sa  1  I  eti  se  1  manufactur¬ 
ers,  and  used  for  exhibition  purposes,  were  and 
are  of  a  width  greater  than  approximately  one  57 


(c)  In  and  by  said  license  agreement,  said  Pat¬ 
ents  Company  granted  to  each  of  said  licensed 
manufacturers  the  right  and  license,  for  the 
United  States,  its  territories  and  possessions, 
to  manufacture  and  sell  motion  picture  exhibiting 
or  projecting  machines,  embodying  one  or  more  of. 
the  inventions  described  and  claimed  in  certain  of 
the  letters  patent  hereinbefore  mentioned;  and 
said  Patents  Company  released  each  licensee  from 


( Complaint .) 


liability  i'or  profits  and  damages  by  reason  of 
prior  infringement. 

(il)  In  and  by  said  license  agreement,  the  li¬ 
censee  admitted  the  validity  of  the  letters  patent 
described  therein,  to  wit:  Numbers  578185, 
580749,  58G953,  588910,  073329,  073992,  707934, 
722382,  744251,  770937,  771280,  785205,  and 
785237;  the  validity  of  some  or  all  of  which  had 
theretofore  been  questioned  and  had  been  in  liti¬ 
gation  among  the  respective  owners  of  said  let- 

59  tors  patent  and  between  some  or  all  of  such  own¬ 
ers  and  other  of  the  defendants  heroin  desig¬ 
nated  ns  licensed  manufacturers. 

(e)  In  and  by  said  license  agreement,  each 
licensee  covenanted  and  agreed,  that  on  all  mo¬ 
tion  picture  exhibiting  or  projecting  machines 
containing  one  or  more  of  the  inventions  de¬ 
scribed  and  claimed  in  letters  patent  numbers 
073329,  744251,  770937,  771280,  785205,  and 
785237,  made  in  the  United  States,  its  territories 
and  possessions,  by  the  licensee,  and  sold  during 

60  the  operation  of  the  license,  the  licensee  would 
pay  certain  fixed  royalties;  and  that  every  mo¬ 
tion  picture  exhibiting  or  projecting  machine 
capable  of  exhibiting  or  projecting,  by  trans¬ 
mitted  light,  motion  pictures  on  a  film  of  approxi¬ 
mately  greater  width  than  one  inch,  and  embody¬ 
ing  one  or  more  of  the  inventions  described  and 
claimed  in  letters  patent  numbers  578185,  580749 
580953,  588910,  073329,  073992,  707934  700380’ 
744251,  770397,  771280,  785205,  and  785237,  made 
m  the  United  States, its  territories  or  possessions, 
by  the  licensee,  should  he  sold  by  the  licensee, 
except  when  sold  for  export,  under  the  restrie- 


21. 

{Complaint.)  61 

tion  and  condition  that  such  exhibiting  or  pro¬ 
jecting  machines  should  bo  used  solely  i'or  ex¬ 
hibiting  or  projecting  motion  pictures  containing 
the  inventions  of  reissued  lottors  patent  number 
12192,  leased  by  a  licensee  of  the  Patents  Company 
and  upon  other  terms  to  bo  fixed  by  said  Putonts 
Company  and  complied  with  by  the  user,  which 
other  terms  should  bo  only  the  payment  of  a  roy¬ 
alty  or  rental  to  the  Patents  Company  while  in 
use.  It  was  further  covenanted,  that  each  licensee 
would  attach  in  a  conspicuous  place,  to  each  ex-  ■ 
hibiting  or  projecting  machine  of  the  licensee’s  62 
manufacture,  sold  by  it,  except  for  export,  a  plate 
showing  plainly  not  only  the  dates  of  the  letters 
patent  under  which  the  machine  was  licensed,  but 
also  the  following  words  and  figures: 

“Serial  No. 

Patented.  No. 

“The  sale  and  purchase  of  this  machine 
gives  only  the  right  to  use  it  solely  with  mov¬ 
ing  pictures  containing  the  invention  of  re-  " 
issued  patent  No.  12192,  leased  by  a  licensee 
of  the  Motion  Picture  Patents  Company,  the  6, 
owner  of  the  above  patents  and  reissued  pat-  3 
ont,  while  it  owns  said  patents,  and  upon 
other  terms  to  be  fixed  by  the  Motion  Picture 
Patents  Company  and  to  be  complied  with  by 
the  user  while  it  is  in  use  and  while  the  Mo¬ 
tion  Picture  Patents  Company  owns  said 
patents.  The  removal  or  defacement  of  this 
plate  terminates  the  right  to  use  this  ma¬ 
chine.” 

( f )  In  and  by  said  license  agreement,  each  li¬ 
censee  further  covenanted  that  every  motion  pic¬ 
ture  exhibiting  or  projecting  machine  not  capable 


( Complaint .) 


of  exhibiting  or  projecting,  by  transmitted  light, 
motion  pictures  on  a  film  of  a  width  greater  than 
approximately  one  inch,  or  capable  of  exhibiting 
or  projecting  motion  pictures  on  film  of  any  width, 
but  only  with  reflected  light,  and  embodying  one 
or  more  of  the  inventions  described  and  claimed 
in  letters  patent  numbers  578185,  580749,  58G953, 
588910,  073329,  073992,  707934,  722382,  744251, 
770937,  771280,  785205,  and  785237,  and  made  in 
the  United  States,  its  territories  and  possessions, 
by  the  licensee,  should  bo  sold  by  the  licensee, 

65  except  when  sold  for  export,  under  the  restric¬ 
tion  and  condition  that  said  machine  should  be 
used  in  exhibiting  or  projecting  motion  pictures 
only  in  places  to  which  no  admission  fee  should 
be  charged;  and  that  the  licensee  would  attach 
in  a  conspicuous  place  to  every  such  machine  a 
plate  showing  not  only  the  dates  of  the  letters 
patent  under  which  suid  machine  was  licensed, 
but  also  the  following  words  and  figures: 

“Patented.  No. 

“The  sale  and  purchase  of  this  machine 

66  gives  only  the  right  to  use  it  so  long  us  this 
plate  is  not  removed  or  defaced  and  in  places 
to  which  no  admission  foe  is  charged.” 

(g)  In  and  by  said  license  agreement,  each  li¬ 
censee  further  covenanted  not  to  make  or  sell 
repair  parts  for  motion  picture  exhibiting  or  pro¬ 
jecting  machines  manufactured  or  imported  and 
sold  by  any  other  person,  firm  or  corporation  li¬ 
censed  by  the  Patents  Company  to  manufacture 
or  import  and  sell  such  machines  under  all  or  any 
of  the  United  States  letters  patent  herein  last 
above  mentioned  by  numbers;  and  further  covc- 


( Complaint .) 


minted  not  to  sell  any  exhibiting  or  projecting 
machine  at  loss  than  the  licensee’s  list  price,  ex¬ 
cept  to  jobbers  and  other  persons,  firms  or  cor¬ 
porations  for  the  purpose  of  resale,  aiid  that  the 
licensee  would  require  such  jobbers  and  other 
persons,  firms  and  corporations  to  sell  such  ma¬ 
chines  at  not  less  than  the  licensee’s  list  price, 
except  a  discount  of  two  per  cent,  for  payment  in 
ton  days;  and  further  covenanted  not  to  sell,  nftcr 
May  1,  1909,  any  exhibiting  or  projecting  machine 
capable  of  exhibiting  or  projecting  by  transmitted 
light  motion  pictures  on  a  film  of  a  width  greater  68 
than  approximately  one  inch,  at  a  loss  list  price 
than  one  hundred  and  fifty  dollars  ($150),  which 
might  include  various  designated  attachments, 
and  that  complete  machines  might  bo  sold  between 
February  1,  1909,  and  May  1,  1909,  at  a  less  list 
price  than  one  hundred  and  fifty  dollars  ($150), 
but  only  to  persons,  firms  or  corporations  not  en¬ 
gaged  in  the  business  of  renting  motion  picture 
films,  and  not  for  use  in  any  permanent  or  fixed 
place  of  exhibition.  1 

(h)  In  and  by  said  license  agreement,  it  was 
further  agreed,  that  the  Patents  Company  might  69 
grant  other  licenses  to  manufacture  or  import 
and  sell  exhibiting  or  projecting  machines  under 
any  or  all  of  the  United  States  letters  patent 
herein  last  above  mentioned  by  numbers,  said, 
licenses  to  be  in  writing,  and  not  to  be  granted  or 
continued  under  terms,  conditions  or  stipulations 
in  any  respect  more  favorable  to  such  licensees 
than  those  set  forth  in  said  license  agreement, 
except  three  named  concerns,,  including  the  defend¬ 
ant  Edison  Manufacturing  Company  and  said 
Ai-mat  Company,  none  of  which  should  pay 


j0  ( Complaint .) 

any  royalties  on  machines  embodying  any 
or  all  of  the  inventions  described  and  claimed 
in  letters  patent  numbers  578185,  580719,  586953, 
588916,  673992,  707931,  and  722382,  when  such 
machines  should  be  sold  bona  fide  for  export,  un¬ 
less  such  machines  should  also  embody  one  or 
more  of  the  inventions  described  and  claimed  in 
letters  patent  numbers  673329,  711251,  770937, 
771280,  785205,  and  785237,  in  which  case  a  fixed 
royalty  for  each  such  machine  should  be  paid. 

•pi  (i)  In  and  by  said  license  agreement,  it  was 
further  mutually  agreed,  between  tho  Patents 
Company  and  each  licensee,  that  tho  license  agree¬ 
ment  should  take  effect  on  February  1,  1909,  and 
continue  until  June  20,  1910,  with  the  option  to 
the  licensee  to  renew  the  agreement  and  license 
thereafter  from  year  to  year  upon  the  same  terms, 
conditions  and  stipulations,  by  giving  notico  to 
the  licensor  on  or  before  March  20th  in  each  year, 
beginning  witji  tho  year  1910,  and  that  thereupon 
tho  license  should  bo  deemed  renewed  for  tho 
period  of  one  year,  beginning  Juno  20th  of  the 
year  following  such  notice,  and  that  such  notico 

72  might  be  given  by  the  licensee  during  the  life  or 
lives  of  each  or  all  of  the  patents  under  which 
the  licensee  was  by  said  agreement  licensed. 

(j)  In  and  by  said  license  agreement,  it  was 
further  mutually  agreed,  that  the  agreement 
might  be  terminated  during  the  original  term,  or 
any  renewal  period,  if  either  party  should  know¬ 
ingly  or  through  gross  neglect  or  carelessness  be 
guilty  of  bread),  violation  or  non-performauce 
of  its  covenants,  conditions  and  stipulations,  re¬ 
sulting  in  substantial  injury  to  the  other  party, 


25 

( Complaint .) 

and  should,  for  the  period  of  forty  days  after 
notice  thereof  from  tho  other  party,  persist  there¬ 
in  or  fail  to  repair  the  same.  Reparation,  how¬ 
ever,  within  such  period  of  forty  days  should  not 
prevent  termination  of  tho  agreement  if  thereafter 
the  guilty  party  should  knowingly  or  through 
gross  neglect  or  carelessness  be  guilty  of  a  second 
breach,  resulting  in  substantial  injury  to  the  other 
party. 

Eighth  :  The  plaintiff  further  alleges,  upon 
information  and  belief,  that  each  of  said  licensed 
agreements  has  been  renewed,  pursuant  to  the 
provisions  thereof,  from  year  to  year,  and  is  still 
in  full  force  and  effect,  and  that  tho  intention 
of  tho  Patents  Company  and  said  licensed  manu¬ 
facturers  is  to  continue  said  license  agreements 
in  force  and  effect  during  tho  life  of  the  patent 
owned  by  said  Patents  Company  which  is  latest 
to  expire. 

(a)  Soon  after  this  combination  of  licensed 
manufacturers  with  said  Patents  Company  was 
formed,  competition  among  said  licensed  manu¬ 
facturers  ceased  and  they  very  substantially  in¬ 
creased  the  prices  theretofore  prevailing  for  the 
films  made  by  them  and  have  ever  since  main¬ 
tained  such  increased  prices,  and  now  intend  a 
further  increase. 

Ninth:  Shortly  after  the  organization  of  the 
Patents  Company,  and  in  January,  1909,  and 
after  the  aforesaid  combination  between  the 
Patents  Company  and  the  licensed  manufactur¬ 
ers  had  been  effected,  and  the  aforesaid  patents 
transferred  to  the  Patents  Company,  and  the 


76  ( Complaint .) 

aforesaid  license  agreements  between  tile  Patents 
"ompany  and  said  licensed  manufacturers  bad 
boon  entered  into,  a  meeting  was  called  at  tbe 
Borough  of  Manhattan,  City  of  New  York, 
by  the  Patents  Company,  and  the  afore¬ 
said  licensed  manufacturers,  to  which  repre¬ 
sentatives  of  all  the  principal  rental  agencies 
throughout  the  United  States,  about  120  in  num¬ 
ber,  including  the  plaintiff,  were  invited.  A  largo 
number  of  such  representatives,  including  a  rep¬ 
resentative  of  the  plaintiff,  attended  said  ineet- 

77  ing,  and  were  then  and  there  informed  in  outline 
of  the  arrangements  that  had  been  effected  be¬ 
tween  the  Patents  Company  and  the  licensed 
manufacturers,  and  of  the  intention  of  said  Pat¬ 
ents  Company  and  licensed  manufacturers  to  re¬ 
duce  the  number  of  rental  agencies  in  the  United 
States,  and  to  require  all  such  rental  agencies  as 
might  be  permitted  to  continue  business  to  accept 
licenses  from  said  Patents  Company,  grunting 
such  rental  agencies  the  privilege  of  leasing,  but 
not  purchasing,  films  from  the  licensed  manufac¬ 
turers,  and  no  others,  and  in  turn  of  leasing  such 
films  and  licensed  machines  and  apparatus  to  such 

7  exhibitors  throughout  the  United  States  and  Can¬ 
ada  as  should  be  licensed  by  said  Patents  Com¬ 
pany,  and  as  would  agree  not  to  use  any  other  mo¬ 
tion  picture  films  than  those  manufactured  by  the 
licensed  manufacturers  under  the  license  of  the 
Patents  Company,  or  any  other  exhibiting  or  pro¬ 
jecting  machines  or  apparatus  than  those  licensed 
by  the  Patents  Company,  and  would  pay  a  license 
fee  to  said  Patents  Company  on  each  machine. 
Further  requirements  on  the  part  of  the  exhibi¬ 
tors,  as  hereinafter  stated,  were  required  to  be 
exacted  by  the  rental  agencies. 


j 

f 

j 

J 

I 


( Complaint .) 

(a)  The  representatives  of  said  rental  agencies 
protested  against  the  scheme  ns  unjust  and  op¬ 
pressive;  but  the  representatives  of  the  Patents 
Company  and  of  the  licensed  manufacturers  in¬ 
sisted  that  the  rental  agencies  must  choose  be¬ 
tween  accepting  licenses  from  the  Patents  Com¬ 
pany  and  operating  under  the  restrictions  there, 
by  imposed,  or  retiring  from  the  motion  picture 
business  altogether.  Thereupon,  after  much  dis¬ 
cussion,  the  rental  agencies,  being  helpless  and 
unable  to  obtain  satisfactory  films  or  apparatus, 
except  by  the  means  dictated  by  the  Patents  Com¬ 
pany  and  the  licensed  manufacturers,  reluctantly 
acquiesced,  and  a  considerable  number  of  such 
rental  agencies  throughout  tho  United  States,  in-  ' 
eluding  the  plaintiff,  accepted  license  agreements, 
identical  in  terms,  from  the  Patents  Company. 

(b)  Tho  number  of  rental  agencies  in  the  Bor¬ 
ough  of  Manhattan,  City  of  New  York,  was  ar¬ 
bitrarily  reduced  by  tho  Patents  Company  and 
tho  licensed  manufacturers  from  upwards  of 
twonty  to  nine,  the  Patents  Company,  with  the 
concurrence  of  the  licensed  manufacturers,  refus¬ 
ing  to  license  more  than  nine  agencies  in  said 
Borough  of  Manhattan;  and  the  Patents  Company 
and  the  licensed  manufacturers  largely  reduced 
Urn  number  of  rental  agencies  throughout  the 
United  States,  by  refusing  to  license  a  number  of 
such  rental  agencies  with  which  tho  licensed  man¬ 
ufacturers  had  theretofore  dealt  for  a  number  of 
years.  The  number  of  agencies  in  the  United 
States  was  reduced  from  about  one  hundred  and 
twenty  to  about  seventy-five. 

Tenth:  Thereupon,  on  January  20,  1909,  an 
agreement,  known  as  an  “Exchange  License 


( Complaint .) 


Agreement,”  was  entered  into  between  the  plain¬ 
tiff  and  the  defendant  Patents  Company.  A  copy 
of  said  agreement,  marked  Exhibit  A,  is  hereto 
annexed  and  made  part  of  this  complaint.  At  andV 
before  the  time  of  the  execution  of  said  Exhibit; 

A,  it  was  mutually  understood  and  agreed,  bc-V 
tween  the  plaintiff  and  the  defendant  Patents'  ; 
Company,  that  said  license  agreement,  Exhibit1  i 
A,  should  continue  during  the  unexpired  term  of 
reissued  letters  patent  number  12192,  unless 
sooner  terminated  for  causo,  pursuant  to  the 
provisions  of  Paragraph  19  of  said  agreement. 

(a)  The  plaintiff  entered  into  said  license 
agreement  under  compulsion,  because  it  could  not 
otherwise  obtain  licensed  machines  or  licensed 
film,  both  of  which  wore  essential  to  its  business. 

The  plaintiff  further  alleges,  upon  information 
and  belief,  that  while  certain  unlicensed  manufac¬ 
turers  wore  and  are  engaged  in  producing  both 
machines  and  film,  most  or  all  of  such  machines 
have  failed  to  comply  with  the  requirements  of  the 
New  York  Board  of  Underwriters  and  of  the  De¬ 
partment  of  Water  Supply,  Gas  and  Electricity  of 
the  City  of  New  York,  and  therefore  cannot 
legally  be  used  in  public  exhibitions  in  the  City  of 
Now  York,  The  films  produced  by  such  unli¬ 
censed  manufacturers  were,  and  still  are,  inferior, 
both  in  range  of  subjects  and  in  perfection  of  the 
scenes  photographed,  to  the  films  produced  by  the 
aforesaid  licensed  manufacturers;  the  unlicensed 
films  have  not.  until  recently,  been  produced  in 
quantities  sufficient  for  the  plaintiff’s  business;  :  jl 
and  there  has  been,  and  still  is,  litigation  in  the  if 

Circuit  Courts  of  the  United  States  between  the  -If 

Patents  Company,  as  complainant,  and  the  un-  |j 


( Complaint .)  85 

licensed  manufacturers  of  machines  and  films, 
ns  defendants,  in  which  it  has  boon  and  is  con¬ 
tended  by  the  complainant  that  the  machines 
and  films  produced  by  said  unlicensed  manufac¬ 
turers  infringe  some  or  all  of  the  aforesaid  pat¬ 
ents  now  owned  by  the  Patents  Company,  and  it 
never  has  been,  since  December,  1908,  null  is  not 
now,  safe  or  commercially  practicable  for  the 
plaintiff  or  other  rental  agencies,  to  use  either  the 
machines  or  the  films  produced  by  said  unlicensed 
manufacturers,  not  only  because  such  use  would 
involve  tho  users  in  litigation,  but  because,  if  the  86 
claims  of  the  Patents  Company  should  be  sus¬ 
tained,  the  supply  of  unlicensed  machines  and 
films  would  bo  cut  off. 

( b )  In  addition,  the  films  produced  by  the  un¬ 
licensed  manufacturers  have  acquired  no  such 
degree  of  popularity  as  those  produced  by 
the  licensed  manufacturers,  who,  owing  to  the 
greater  length  of  time  during  which  they  have 
carried  on  tho  business,  have  perfected  their 
organization  and  methods  of  production  to  a  de¬ 
gree  not  vet  reached  by  the  unlicensed  manufac¬ 
turers.  The  substitution  of  films  produced  by  §7 
independent  manufacturers  would  greatly  preju¬ 
dice  the  plaintiff’s  business  and  largely  reduce  its 
profits.  The  plaintiff  has  extensively  advertised 
the  superiority  of  the  films  produced  by  the  licens¬ 
ed  manufacturers  over  the  unlicensed  films,  and 
has  educated  a  large  clientele  patronizing  a  num¬ 
ber  of  theatres  in  tho  City  of  New  York  and  else¬ 
where  in  the  State  of  New  York  and  in  other 
States,  which  are  supplied  with  film  by  the  plain¬ 
tiff,  to  the  superiority  of  said  licensed  films,  and 
the  failure  of  tho  plaintiff  to  furnish  such  licensed 


(Complaint.) 


films  and  any  attempt  to  deal  in  unlicensed  films 
would  result  in  practically  the  complete  loss  of  the 
patronage  of  its  present  customers. 

Eleventh  :  Tile  plaintiff,  ever  since  its  organ¬ 
ization,  has  carried  on  the  business  of  a  renlul 
agency,  and  has  supplied  machines  and  film  to  a 
largo  number  of  licensed  exhibitors  in  the  City  of 
New  York,  elsewhere  in  the  State  of  New  York, 
and  in  the  States  of  New  Jersey,  Connecticut  and 
Massachusetts.  The  plaintiff  supplies  films  to 
89  ten  of  the  largest,  best  equipped  and  best  patron¬ 
ized  motion  picture  theatres  in  the  City  of  Now 
York,  and  which  exhibit  motion  pictures  to  three 
hundred  and  fifty  thousand  (350,000)  people  in 
every  week;  and,  in  addition,  to  about  ninety  (90) 
other  motion  picture  theatres  in  the  City  of  New 
York,  as  well  as  to  similar  exhibitors  in  various 
places  in  the  other  States  mentioned. 

(a)  The  plaintiff  has  a  largo  investment  in  its 
plant  and  property,  and  has  established  a  valu¬ 
able  good-will,  all  of  which  will  bo  rendered  worth¬ 
less,  if,  by  the  threatened  action  of  the  defendants, 
9°  the  plaintiff  should  be  unable  lo  continue  its  busi¬ 
ness  and  supply  licensed  films  as  heretofore. 

Twelfth:  One  of  the  conditions  of  the  plain- 
I  tiff’s  aforesaid  license  agreement,  Exhibit  A,  is 

I  that  prescribed  by  Paragraph  9,  to  the  effect  that 

I  the  plaintiff  should,  without  receiving  any  pny- 
I  meat  therefor,  return  to  each  licensed  manufac- 
(  hirer  or  importer,  on  the  first  day  of  every  month, 
commencing  seven  months  after  February  1, 1909, 


3i 

( Complaint .) 

the  equivalent  amount  of  positive  motion  picture 
film  in  running  feet  (not  purchased  or  leased  over 
twelve  months  before),  and  of  the  make  of  such 
licensed  manufacturer  or  importer,  equal  to  the 
amount  of  licensed  motion  pictures  that  was  so 
leased  during  the  seventh  month  preceding  the 
day  of  each  such  return;  and,  pursuant  to  said 
requirement,  the  plaintiff  has  from  time  to  time, 
since  September,  1909,  without  receiving  any  com¬ 
pensation,  returned  large  quantities  of  positive 
motion  picture  film  to  the  defendants  herein 
designated  as  licensed  manufacturers,  which  the 
plaintiff  had  purchased  and  owned  outright,  of 
an  actual  value  of  upwards  of  one  hundred  thou¬ 
sand  dollars  ($100,000),  and  the  purchase  price 
of  which  was  upwards  of  three  hundred  thousand 
dollars  ($300,000). 

Thirteenth  :  The  plaintiff  has  duly  performed 
all  the  conditions  of  the  aforesaid  license  agree¬ 
ment,  Exhibit  A,  on  its  part  to  be  performed. 

Fourteenth  :  The  Patents  Company,  in  addi¬ 
tion  to  the  royalties  paid  by  the  licensed  manufac¬ 
turers,  as  hereinbefore  set  forth,  has  received  from  93 
or  through  each  licensed  rental  agency,  pursuant 
to  the  provisions  of  paragraph  12  of  said  license 
agreement,  Exhibit  A,  a  license  fee  of  two  dollars 
per  week  for  each  licensed  projecting  machine 
used  by  each  licensed  exhibitor.  The  plaintiff  has 
paid  to  said  Patents  Company  during  the  exis¬ 
tence  of  the  agreement,  Exhibit  A,  upwards  of 
Thirty  thousand  dollars  ($30,000)  for  such  license 
foes  required  to  be  paid  by  exhibitors.  In  prac¬ 
tice  such  exhibitors  usually  refused  to  pay  such 
license  fees,  and  plaintiff  was  compelled  to  pay  ■ 


(Complaint.) 


the  same.  The  plaintiff  further  alleges,  upon  in¬ 
formation  and  belief,  that  since  January,  1909, 
said  Patents  Company  has  received  in  license 
fees  paid  by  virtue  of  similar  provisions,  under 
license  agreements  like  Exhibit  A,  upwards  of 
One  million  dollars  ($1,000,000). 

Fifteenth:  The  plaintiff  further  alleges,  upon 
information  and  belief,  that  at  or  about  the  same 
time  when  the  aforesaid  license  agreements  wore 
made  between  the  Patents  Company  and  the  li- 
95  censed  manufacturers,  a  separate  agreement  was 
made  and  entered  into  between  said  Patents  Com¬ 
pany  and  said  licensed  manufacturers,  by  which 
for  divers  valuable  considerations  said  licensed 
manufacturers  undertook  and  agreed  to  and  with 
said  Patents  Company  that  they,  the  said  licensed 
manufacturers,  would  supply  to  all  rental  agen¬ 
cies  licensed  by  said  Patents  Company,  all  films 
manufactured  by  said  licensed  manufacturers  re¬ 
spectively,  on  payment  by  such  licensed  rental 
agencies  of  the  prices  fixed  by  said  licensed  man¬ 
ufacturers.  The  plaintiff  further  alleges,  upon 
information  and  belief,  that  the  said  last-mon- 
9  tinned  agreement  over  since  has  boon  and  still 
is  in  full  force  and  effect  and  was  made  by  the 
parties  thereto  for  the  benefit  of  such  rental  agen¬ 
cies,  including  the  plaintiff,  as  might  be  licensed 
by  said  Patents  Company,  and  to  assure  to  said 
licensed  rental  agencies  a  source  of  supply  of  the 
aforesaid  films,  without  which  it  would' bo  impos¬ 
sible  for  such  rental  agencies  to  carry  on  business. 

(a)  The  plaintiff  further  alleges,  upon  informa¬ 
tion  and  belief,  that  at  or  about  the  same  time  as 
said  last-mentioned  agreement  was  made  between 


(Complaint.) 


97 


said  Patents  Company  and  said  licensed  manufac¬ 
turers,  said  Patents  Company  licensed  cortain 
manufacturers  of  projecting  machines  to  manu¬ 
facture  the  same  and  sell  them  to  licensed 
rental  agencies  and  licensed  exhibitors,  and 
entered  into  an  agreement  with  said  manu¬ 
facturers,  so  licensed,  of  such  projecting 
machines,  whereby  the  latter  undertook  and 
agreed  to  and  with  said  Patents  Company,  for  the 
benefit  of  rental  agencies  and  exhibitors  licensed 
by  said  Patents  Company,  to  furnish  projecting 
machines  to  such  licensed  rental  agencies  and  98 
licensed  exhibitors  on  payment  of  the  price  exact¬ 
ed  by  said  manufacturers  for  said  machines. 

(l>)  The  manufacturers  of  projecting  machines 
licensed  by  said  Patents  Company  were  limited  to 
thirteen  in  number,  although  there  were  n  number 
of  other  manufacturers  of  such  machines,  and  each 
of  the  manufacturers  so  licensed  agreed  to  pay  a 
royalty  to  said  Patents  Company  upon  each  ma¬ 
chine  manufactured  and  sold.  The  effect  of  such 
agreement  with  said  manufacturers  of  projecting 
machines  was  to  limit  the  source  of  supply  of  said 
machines  and  to  aid  the  Patents  Company  in  99 
effectuating  a  monopoly  of  the  motion  picture 
business  in  all  its  branches.  In  fact,  only  five  of 
the  thirteen  manufacturers  so  licensed  ore  manu¬ 
facturing  or  selling  such  machines. 

Sixteenth:  The  plaintiff  ever  since  the  execu¬ 
tion  of  the  license  agreement,  Exhibit  A,  has 
leased  films  from  the  defendants  herein  designated 
as  licensed  manufacturers,  and  all  of  the  plain¬ 
tiff’s  orders  have  hitherto  been  promptly  executed 
and  it  has  received  in  each  week  since  January  20, 


( Complaint .) 


1909,  from  eighteen  to  thirty-six  reels  of  film  con¬ 
taining  photographs  of  new  scones  or  subjects, 
that  quantity  being  the  maximum  output  of  the 
combined  licensed  manufacturers,  and  tho  plain¬ 
tiff  in  turn  has  leased  such  film  to  various  licensed 
exhibitors  as  hereinbefore  mentioned. 

Seventeenth:  Tho  Patents  Company  in  the 
early  part  of  1909  licensed  nine  rental  agencies 
in  tho  Borough  of  Manhattan,  City  of  Now  York, 
under  license  agreements  in  all  respects  similar 
to  tho  aforesaid  agreement,  Exhibit  A,  made  with 
tho  plaintiff.  Thereafter  tho  defendant  General 
Film  Company  was  organized  on  or  about  April 
21,  1910,  for  tho  purpose  of  carrying  on  tho  busi¬ 
ness  of  a  rental  agency;  and  tho  plaintiff  alleges, 
upon  information  and  belief,  that  said  company 
was  organized  and  is  controlled  by  said  Patents 
Company  and  said  licensed  manufacturers,  and 
that  said  General  Film  Company  and  said  Patents 
Company  and  said  licensed  manufacturers  have 
common  officers  and  directors,  to  wit: 

Frank  L.  Dyer,  President  of  Edison  Manufac¬ 
turing  Company;  President  of  tho  Patents  Com¬ 
pany;  Director  of  the  General  Film  Company; 

H.  N.  Marvin,  President  of  American  Muto- 
scope  and  Biograph  Company;  Vice-President  of 
the  Patents  Company; 

J.  J.  Kennedy,  Vice-President  of  American 
Mutoscope  and  Biogrnpli  Company;  Treasurer  of 
the  Patents  Company;  President  of  the  General 
Film'  Company; 


I  ( Complaint .)  I0- 

j  William  Pelzer,  Manager  of  a  branch  of  the 
|  Edison  Manufacturing  Company;  Secretary  of 
|  tho  Patents  Company ; 

|  J.  A.  Burst,  a  Director  of  Pnthe  Froros;  Troas- 
,3  urer  of  tho  General  Film  Company; 

'  Albert  E.  Smith,  Treasurer  of  Vilagraph  Com- 
|  puny  of  America;  Director  of  the  General  Film 
Company. 

3;  Tho  Board  of  Directors  of  said  General  Film  ioq 
%  Company  is  composed  of  the  following:  Frank 
L.  Dyer,  George  K.  Spoor,  Samuel  Long,  George 
Jf  Kleino,  Siognnmd  Lubin,  J.  A.  Berst,  W.  N.  Selig, 
Albert  E..  Smith  and  J.  J.  Kennedy ;  of  whom,  in 
jf  addition  to  those  already  mentioned,  said  Spoor 
|  is  an  officer  and  director  of  the  defendant  Essanay 
|  Film  Manufacturing  Company,  one  of  the  licensed 
!|  manufacturers;  said  Long  is  an  officer  and  di¬ 
ll  rector  of  tho  defendant  Kalem  Company,  one 
$  of  the  licensed  manufacturers;  said  Kleine 
|  is  a  licensed  manufacturer;  said  Lubin  is  Presi- 
I  dent  and  a  director  of  tho  defendant  Lubin  Manu¬ 
facturing  Company,  one  of  the  licensed  manufac-  I05 
turers ;  and  said  Selig  is  President  and  a  director 
of  tho  defendant  Selig  Polyscope  Company,  one 
of  the  licensed  manufacturers. 

(a)  The  plaintiff  further  alleges,  upon  informa¬ 
tion  and  belief,  that  the  said  General  Film  Com¬ 
pany  was  organized  as  a  part  of  and  in  further¬ 
ance  of  the  combination  and  conspiracy  to  obtain 
control  of  and  to  monopolize  all  branches  of  the 
motion  picture  business  and  to  restrain  trade  and 
commerce  therein  among  the  several  States  and 


(Complaint.) 


with  foreign  nations ;  and  tlmt  in  furtherance  of 
said  object  the  licenses  of  two  of  the  aforesaid 
nine  licensed  rental  agencies  formerly  existing  in 
the  Borough  of  Manhattan,  City  of  Now  York, 
wore  arbitrarily  cancelled  by  said  Patents  Com¬ 
pilin'  and  the  business  thereof  transferred  to  said 
General  Film  Company,  and  of  the  remaining 
seven  rental  agencies  the  business  and  good  will 
of  six  wore  purchased  by' said  General  Film  Com¬ 
pany,  the  owners  of  said  rental  ngencies  being 
coerced  into  making  such  sales  by  the  arbitrary 
cancellation  or  threats  of  arbitrary  cancellation 
of  their  licenses  by  the  Patents  Company,  and 
said  General  Film  Company  has  continued  and 
carried  on  the  business  of  said  purchased  rental 
agencies. 

(h)  The  plaintiff  further  alleges,  upon  informa¬ 
tion  and  belief,  that  prior  to  November  14,  1911, 
in  furtherance  of  the  aforesaid  combination  and 
conspiracy  to  obtain  control  of  the  motion  picture 
business  and  to  vest  the  control  of  the  leasing  nnd 
subleasing  of  films  in  United  States  in  said 
General  Film  Company,  said  Patents  Company 
arbitrarily  cancelled  the  licenses  of  a  number  of 
licensed  rental  agencies  doing  business  in  various 
parts  of  the  United  States,  and  by  means  of 
threats  of  such  arbitrary  cancellation  compelled 
the  sale  of  the  business  and  good  will  of  the  re¬ 
maining  licensed  rental  agencies,  except  the  plain¬ 
tiff,  to  said  General  Film  Company,  which  suc¬ 
ceeded  to  and  acquired  and  has  ever  since  car¬ 
ried  on  the  business  of  all  of  said  licensed  rental 
agencies  so  forced  out  of  existence. 

(c)  The  plaintiff  is  the  only  remaining  licensed 
agency  carrying  on  business  in  the  United  States; 


37 

(Complaint.) 

and  the  plaintiff  further  alleges,  upon  informa¬ 
tion  and  belief,  that  said  General  Film  Company 
supplies  film  for  upwards  of  five  hundred  (500) 
motion  picture  theatres  in  the  City  of  New  York, 
which  were  formerly  supplied  by  the  aforesaid 
nine  licensed  agencies. 

Eighteenth  :  Several  months  prior  to  Novem¬ 
ber  14,  1911,  the  defendants  Patents  Company 
and  General  Film  Company  urged  the  plaintiff  to 
sell  to  said  General  Film  Company  its  business 
and  good  will  nnd  offered  to  pay  One  hundred 
thousand  dollars  ($100,000)  therefor,  provided 
the  plaintiff  would  surrender  its  aforesaid  license 
agreement,  Exhibit  A,  which  offer  the  plaintiff 
refused. 

(a)  On  November  14,  1911  the  defendant  Pat¬ 
ents  Company  served  upon  the  plaintiff  a  notice 
of  which  the  following  is  a  copy : 

“Motion  Picture  Patents  Company, 

80  Fifth  Avenue,  New  York. 

November  14th,  1911. 

Greater  New  York  Film  Rental  Company, 
116  East  14th  Street, 

New  York  City. 


Pursuant  to  the  right  reserved  by  this 
Company  under  the  first  clause  of  Section 
Nineteen  of  the  Conditions  of  License  form¬ 
ing  a  part  of  the  Exchange  License  Agree¬ 
ment  existing  between  you  nnd  this  'Com¬ 
pany,  and  bearing  date  of  the  twentieth  day 
of  January,  Nineteen  hundred  and  nine,  we 


( Complaint .) 


hereby  notify  of  our  intention  to  terminate 
said  licenso  nnd  Hint  the  same  will  terminate 
nt  eight  o’clock  A.  M.  on  Monday  the  fourth 
day  of  December,  Nineteen  hundred  and 
eleven,  unless  sooner  terminated  by  this 
Company  for  any  broach  of  the  conditions  of 
said  license. 

Yours  truly, 

Motion  Piotuhk  Patknts  Company, 

By  II.  N.  Maiivin 

Vice-President.” 

(b)  Thereafter  a  conference  was  had  between 
the  President  of  tbe'  plaint  i IT  and  the  aforesaid 
.T.  A.  Borst,  a  director  of  the  defendant  Pa  the 
Frores,  and  Treasurer  of  said  General  Film 
Company.  Said  Borst  informed  the  President  of 
the  plaintiff  that  the  reason  for  the  aforesaid 
notice  of  cancellation  was  that  the  Patents  Com¬ 
pany  and  the  licenod  manufacturers  and  the  Gen¬ 
eral  Film  Company  had  determined  to  increase 
the  price  to  be  charged  by  said  licensed  manu¬ 
facturers  for  film,  and  that  so  long  as  the  plain¬ 
tiff  held  its  license  such  price  could  not  be  increas¬ 
ed  and  said  licensed  manufacturers  could  not  ob¬ 
tain  complete  control  of  the  motion  picture  busi¬ 
ness,  which  they  desired  to  obtain.  Said  Borst  fin¬ 
ally  undertook,  if  the  plaintiff  would  surrender  its 
license  without  opposition,  to  attempt  to  influence 
his  associates  in  the  Patents  Company  and  the 
General  Film  Company  to  make  an  offer  to  the 
plaintiff  for  the  purchase  of  its  business  and  good 
will. 

(c)  Shortly  thereafter  at  a  conference  between 
tbe  plaintiff’s  President  and  tbe  aforesaid  J.  J. 
Kennedy,  Treasurer  of  the  Patents  Company  and 


( Complaint ,) 


President  of  said  General  Film  Company,  said 
Kennedy,  acting,  the  plaintiff  alleges,  upon  infor¬ 
mation  and  belief,  in  behalf  of  both  of  said  com¬ 
panies  and  of  said  licensed  manufacturers,  after 
first  insisting  that  the  plaintiff  hud  nothing  to  sell, 
inasmuch  as  its  license  had  boon  cancelled,  fin¬ 
ally  offered  to  reinstate  said  license  and  to  pay 
the  plaintiff  Ninety  thousand  dollars  ($90,000) 
for  its  business  nnd  good  will,  provided  the  same 
should  bo  transferred  to  the  General  Film  Com¬ 
pany  together  with  the  lease  of  the  premises  oc¬ 
cupied  by  tbe  plaintiff  at  11G  East  14th  Street  in 
the  Borough  of  Manhattan,  City  of  New  York,  on 
or  before  eight  A.M.  on  December  11,  1911.  The 
plaintiff’s  President  suggested  that  such  papers 
as  wore  desired  by  Mr.  Kennedy  to  be  executed 
by  the  plaintiff,  bo  prepared  and  sent  to  the  plain¬ 
tiff  for  examination  by  its  counsel,  nnd  thereupon 
said  Kennedy  telephoned  to  tbe  aforesaid  II.  N. 
Marvin  and  directed  him  to  send  to  tbe  plaintiff 
a  notice  of  withdrawal  of  the  notice  of  cancella¬ 
tion  of  November  14,  1911. 

(d)  Thereafter,  on  or  about  December  2,  1911, 
the  plaintiff  received  from  said  Patents  Company 
a  notice  of  which  the  following  is  a  copy : 

“Motion  Ptctuiie  Patents  Company 
80  Fifth  Avenue,  Now  York. 

December  1st,  1911. 

Gkeateh  New  Yoiik  Film  Bental  Company, 
110  East  14th  Street, 

New  York  City. 

Gentlemen: 

Referring  to  our  letter  of  November  14th, 
notifying  you  of  our  intention  to  terminate 


( Complaint .) 


( Complaint .) 


your  license  on  the  fourth  day  of  December, 
Nineteen  hundred  and  eleven,  wo  hereby  no¬ 
tify  you  tlmt  said  notice  of  termination  is 
hereby  withdrawn. 

Tours  truly, 

MoTrON  PlCTUKE  PATENTS  COMPANY, 

By  H.  N.  Marvin  Vico  Pres.” 

(c)  Thereafter  on  or  about  December  7,  1911, 
the  plaintiff  notified  said  Kennedy  that  it  would 
not  sell  its  business  or  surrender  its  license,  and 
immediately  thereafter  the  plaintiff  received  from 
said  Patents  Company  a  notice  of  which  the  fol¬ 
lowing  is  a  copy : 

“Motion  Pictuue  Patents  Company, 

80  Fifth  Avenue,  Now  York. 

December  7th,  1011. 

Cheater  New  York  Film  Dental  Company, 
110  East  14th  Street, 

New  York  City,  N.  Y. 

Gentlemen : 

Pursuant  to  the  right  reserved  by  this  Com¬ 
pany  under  the  first  clause  of  Section  Nine¬ 
teen  of  the  Conditions  of  License  forming 
part  of  the  Exchange  License  Agreement 
existing  between  you  and  this  Company  and 
hearing  date  the  eighteenth  day  of  January, 
Nineteen  hundred  and  nine,  avc  hereby  notify 
you  of  our  intention  to  terminate  said  license 
and  that  the  same  will  terminate  at  eight, 
o’clock  A.  M.  on  Monday  the  twenty-fifth  day 
of  December,  Nineteen  hundred  and  eleven, 
unless  sooner  terminated  by  this  Company 
for  any  breach  of  the  conditions  of  said 
license. 


Yours  truly, 

Motion  Picture  Patents  Company, 
By  II.  N.  Marvin,  Vico  President." 


(J)  The  plaintiff  further  alleges,  upon  informa¬ 
tion  and  belief,  that  tho  threatened  cancellation 
of  the  plaintiff’s  license  is  a  part  of  the  aforesaid 
conspiracy  among  tho  defendants  to  restrain 
trade  and  commerce  among  the  several  states 
and  with  foreign  nations  in  tho  motion  picture 
business  and  particularly  in  the  supply  of  films 
and  apparatus,  and  to  monopolize  and  obtain 
complete  nnd  exclusive  control  of  tho  motion  pic¬ 
ture  business  in  the  United  States  and  Canada. 

Nineteenth.— The  plaintiff  further  alleges, 
upon  information  and  belief,  that  tho  defendants, 
oven  if  restrained  from  cancelling  the  plaintiff’s 
license,  will  seek  to  accomplish  the  same  object 
and  eliminate  the  plaintiff  from  the  motion  pic¬ 
ture  business  by  means  of  withholding  from  the 
plaintiff  the  supply  of  films  which  it  has  hereto¬ 
fore  received  from  the  licensed  manufacturers,  or 
to  cripple  and  destroy  tho  plaintiff’s  said  business 
by  discriminating  against  tho  plaintiff  in  supply, 
ing  snob  film.  It  is  essential  to  the  success  of  the 
plaintiff’s  business  that  films  containing  photo¬ 
graphs  of  new  scenes  and  subjects  be  promptly 
supplied  by  said  licensed  manufacturers,  without 
discrimination,  as  heretofore,  in  order  that  it  may 
be  able  to  compete  with  the  General  Film  Com¬ 
pany  in  the  distribution  of  such  films  to  exhibitors. 

Twentieth  :  The  plaintiff  further  alleges,  upon 
information  and  belief,  that  the  defendants’ 
threatened  refusal  to  deal  with  the  plaintiff  and 
to  supply  it  with  films  produced  by  the  licensed 
manufacurers  under  patents  owned  by  the  de¬ 
fendant  Patents  Company,  is  in  violation  of  the 
duty  owing  by  the  defendants  to  the  plaintiff,  and 


124 


( Complaint .) 


to  the  public  generally,  and  in  violation  of  the 
plaintiff’s  contract  rights,  by  virtue  of  the  plain¬ 
tiff's  aforesaid  license,  Exhibit  A,  and  the  other 
contracts  mentioned  in  this  complaint;  and  that 
the  organization  of  the  defendant  Patents  Com¬ 
pany,  and  the  assignment  to  it  of  the  aforesaid 
letters  patent,  and  the  licenses  and  agreements 
existing  between  said  Patents  Company  and 
said  licensed  manufacturers,  and  the  organization 
of  the  defendant  General  Film  Company,  nnd 
its  control  by  said  Patents  Company  and  said 
125  licensed  manufacturers,  and  the  methods  ot  busi¬ 
ness  pursued  by  all  the  defendants,  constitute  a 
contract,  combination  and  conspiracy  in  restraint 
of  trade  and  commerce  among  the  several  States 
nnd  with  foreign  nations,  nnd  an  attempt  to  mo¬ 
nopolize,  nnd  a  combination  nnd  conspiracy  among 
all  the  defendants  to  monopolize,  the  trade  and 
commerce  among  the  several  States  and  with 
foreign  nations  in  motion  picture  apparatus  and 
films  and  in  the  motion  picture  business  general¬ 
ly;  nnd  that  such  contract,  combination  nnd  con¬ 
spiracy  and  attempt'  to  monopolize  are  in  viola¬ 
tion  of  an  Act  of  Congress  of  the  United  States, 
I2®  approved  July  2,  1890,  commonly  known  as  the 
Sherman  Anti-Trust  Act,  which  provides  as  fol- 

“  Section  1.  Every  contract,  combination 
in  the  form  of  trust  or  otherwise,  or  con¬ 
spiracy,  in  restraint  of  trade  or  commerce 
among  the  several  States,  or  with  foreign 
nations,  is  hereby  declared  to  be  illegal. 
Every  person  who  shall  make  any  such  con¬ 
tract,  or  engage  in  any  such  combination  or 
conspiracy,  shall  be  deemed  guilty  of  a  mis¬ 
demeanor,  and,  on  conviction  thereof,  shall 
bo  punished  by  fine  not  exceeding  five  thous- 


( Complaint .) 


and  dollars,  or  by  imprisonment  not  exceed¬ 
ing  one  year,  or  by  both  said  punishments,,  in 
the  discretion  of  the  court. 

“Section  2.  Every  person  who  shall  mo¬ 
nopolize,  or  attempt  to  monopolize,  or  com¬ 
bine  or  conspire  with  any  other  person  or 
persons  to  monopolize,  any  Dart  of  the  trade 
or  commerce  among  the  several  States,  or 
with  foreign  nations,  shall  bo  doomed  guilty 
of  a  misdemeanor,  and,  on  conviction  thereof, 
shall  he  punished  by  fine  not  exceeding  five 
thousand  dollars,  or  by  imprisonment  not 
exceeding  one  year,  or  by  both  said  punish¬ 
ments,  in  tbe  discretion  of  tbe  court.” 


i 

■f 

■a 

■X 

$ 


(a)  The  plaintiff  has  heretofore,  since  January 
20,  1901),  dealt  and  still  continues  to  deal  with  all 
of  the  defendants  designated  ns  licensed  manu¬ 
facturers,  and  1ms  leased  largo  quantities  of  films 
from  each  of  them,  and  uninterrupted  continuance 
of  the  supply  of  such  films  from  each  of  said  de¬ 
fendants  is  essential  to  the  plaintiff’s  business. 
Said  defendants,  the  licensed  manufacturers,  will 
out  off  the  plaintiff’s  supply  of  films  if  the  plain¬ 
tiff’s  license  should  be  cancelled,  or,  even  without 
such  cancellation,  if  instructed  so  to  do  by  said 
Patents  Company,  or  by  agreement  among  them¬ 
selves  for  the  purpose  of  forcing  the  plaintiff 
to  retire  from  business  as  a  rental  agency.  It 
wdll  be  impossible  for  the  plaintiff  to  secure  ade¬ 
quate  service  from  the  licensed  manufacturers, 
such  ns  the  plaintiff  requires  for  the  successful 
carrying  on  of  its  business,  nnd  such  as  it  has 
heretofore  had,  without  the  aid  of  the  injunction 
of  this  Court. 


■3° 


( Complaint .) 


mieos  herein  set  forth  and  is  rolievable  only  in  a 
court  of  equity  where  matters  of  this  sort  are 
properly  cognizable  and  reliovnblo.  The  plain¬ 
tiff’s  damages  cannot  bo  mousui'od  in  money  or 
ascertained  at  law. 

Whehbkoub,  tho  plaintiff  prays  for  a  docroo : 

(z)  Restraining  the  •  defendants,  and  each  of 
them,  and  their  and  each  of  their  officers,  direc¬ 
tors,  attorneys,  agents  and  servants,  during  tho 

131  life  of  reissued  letters  patent  number  .12192,  from 
interfering  with  the  plaintiff's  business,  or  from 
discriminating  against  it,  or  from  censing  to  sup¬ 
ply  tho  plaintiff,  without  delay  or  discrimination, 
with  motion  picture  films  produced  by  tho  defend¬ 
ants,  designated  ns  licensed  manufacturers,  re¬ 
spectively,  upon  the  plaintiff’s  orders,  upon  tho 
plaintiff’s  paying  for  such  films  and  continuing  to 
perform  tho  conditions  of  its  license,  Exhibit  A; 
and  enjoining  and  restraining  said  defendants, 
tboir  officers,  directors,  attorneys,  agents  and  ser¬ 
vants,  from  in  any  wise  altering,  to  the  plaintiff’s 
prejudice,  in  completeness  and  promptness  of  sor- 

132  v'uoi  or  otherwise*  the  methods  of  business  hereto¬ 
fore  and  now  prevailing  between  the  plaintiff  and 
tho  defendants  designated  as  licensed  manufact- 


(5)  Enjoining  and  restraining  the  defendants, 
and  each  of  them,  and  their  and  each  of  their  offi¬ 
cers,  directors,  attorneys,  agents  and  servants, 
from  taking  from  the  plaintiff’s  possession  or 
that  of  any  customer  or  exhibitor,  or  in  any  wise 
interfering  with,  by  means  of  actions  of  replevin, 
or  otherwise,  any'  of  the  film  possessed  by  tho 


( Complaint .) 


plaintiff ;  and  restraining  tho  defendants,  and  par¬ 
ticularly  tho  General  Film  G'ompuny,  its  officers, 
directors,  attorneys,  agents  and  servants,  from 
interfering  with  the  plaintiff’s  business  or  cus¬ 
tomers,  and  from  attempting  to  alienate  or  entice 
said  customers  from  the  plaintiff'; 

(if)  Enjoining  and  restraining  the  defendant 
Patents  Company,  its  officers,  directors,  attorneys 
and  agents,  during  tho  life  of  said  reissued  let¬ 
ters  patent  number  12192,  from  cancelling  or  at¬ 
tempting  to  cancel  the  plaintiff’s  license,  Exhibit 
A,  or  from  in  any  wise  interfering  with  tho  plain¬ 
tiff’s  business)  or  from  requiring  or  inducing  the 
defendants  designated  as  licensed  manufacturers, 
or  any  of  them,  to  cut  off’,  limit,  or  in  any  wise 
make  loss  efficient  than  heretofore,  the  supply  of 
films  by  said  licensed  manufacturers,  respectively, 
to  the  plaintiff,  or  from  in  any  wise  interfering 
with  tho  business  relations  hitherto  and  now  ex¬ 
isting  between  the  plaintiff  and  said  licensed  man¬ 
ufacturers;  and  tho  plaintiff  prays  that  an  order 
may  be  made  restraining  the  defendants  as  here¬ 
inbefore  prayed,  during  the  pendency  of  this 
action. 

(d)  Declaring  the  plaintiff’s  license  in  full  force 
and  effect,  and  not  subject  to  cancellation,  except 
for  tho  plaintiff’s  breach  of  some  condition  or 
stipulation  in  said  license  contained,  during  the 
life  of  said  reissued  letters  patent  number  12192; 

(/>)  Declaring  void  and  of  no  effect  the  attempt¬ 
ed  cancellation  of  said  license  made  by  the  defend¬ 
ant  Patents  Company  on  December  7,  1911; 


4G 

136  ( Complaint .) 

(ff)  For  such  other,  further  or  different  relief 
in  the  promises  ns  may  bo  agreeable  to  equity  and 
seem  moot  to  the  Court;  besides  the  costs  of  this 
action. 

Rogers  &  Rogers, 

Attorneys  for  Plaintiff, 

Office  and  Post  Office  Address: 

No.  ICO  Broadway, 
Borough  of  Manhattan, 

New  York  City. 

'37  Samuel  Untermyer, 

Of  Counsel. 


Stale  and  County  of  New  York,  ss. : 


'38 


William  Fox,  being  duly  sworn,  says : 

,.I  n,!1.nil°n'cel'>  to  "’it’  President,  of  the  plain- 
till,  which  is  a  domestic  corporation. 

I  have  road  the  foregoing  complaint  and  know 
the  contents  thereof,  and  the  same  is  true  of  my 
own  knowledge,  except  as  to  the  matters  therein 
stated  to  be  alleged  upon  information  and  belief, 
and  as  to  those  matters  I  believe  it  to  be  true. 

William  Fox. 


.16th1  day' "of 
Rap 


before  me 
December,  1 


this) 
1911.  ( 


Notary  Public, 

New  York  County. 


47 

(Cc  1 1  t—i  rut  a.)  ,3g 

Exhibit  A. 

Exoiiangb  License  Agreement. 

Whereas,  the  Motion  Picture  Patents  Com¬ 
pany  of  New  York  City  (hereinafter  referred  to 
as  the  “Licensor”)  is  the  owner  of  all  the  right, 
title  and  interest  in  and  to  reissued  Letters  Pat¬ 
ent  No.  12,192,  dated  .January  12,  1902,  granted  to 
Thomas  A.  Edison,  for  Kinetoscopic  Film,  and 
also  Letters  Patent  Nos.  578,180,  080,749,  580,953, 
588,910,  073,329,  073,992,  707,934,  722,382,  744,-  140 

251,  770,937,  771,280,  785,205  and  785,237,  for  in¬ 
ventions  relating  to  motion  picture  projecting  ma¬ 
chines;  and 

Whereas,  The  Licensor  has  licensed  the  Amer¬ 
ican  Mutoscopo  and  Biograph  Company  of  New 
York  City,  the  Edison  Manufacturing  Company 
of  Orange,  Now  Jersey;  the  Essanny  Company  of 
Chicago;  the  Kalom  Company  of  New  York  City; 
George  Kleino  of  Chicago;  Lubin  Mnnufacuturing  • 
Company  of  Philadelphia;  Pa  the  Frores  of  New 
York  City;  the  Selig  Polyscope  Company  of  Chi¬ 
cago;  and  the  Vitagraph  Company  of  America,  of  '4' 
New  York  City,  (hereinafter  referred  to  ns  “Li¬ 
censed  Manufacturers  or  Importers”)  to  manu¬ 
facture  or  import  motion  pictures  under  the  said 
reissued  Letters  Patent  and  to  lease  licensed  mo¬ 
tion  pictures  (hereinafter  referred  to  as  “Li¬ 
censed  Motion  Pictures”)  for  use  011  projecting 
machines  licensed  by  the  Licensor;  and 

Whereas,  the  undersigned,  (hereinafter  referr¬ 
ed  to  ns  the  “Licensee”)  desires  to  obtain  a  li¬ 
cense  under  said  reissued  Letters  Patent  No.  12,- 


,ll 


( Complain  I  — Exh  i  bit  A.) 

192,  to  lease  from  the  Licensed  Manufacturers 
and  Importers  licensed  motion  pictures  ami  to 
sub-let  the  said  licensed  motion  pictures  for  use 
on  projecting  machines  licensed  by  the  Licensor; 

Now,  therefore,  tub  partiijs  HERETO,  in  consid¬ 
eration  of  tiie  covenants  herein,  have  agreed  as 
follows : 

(1)  The  Licensor  hereby  grunts  to  the  Licensee 
for  the  term  and  subject  to  the  conditions  express¬ 
ed  in  the  “Conditions  of  License”  hereinafter  set 
forth,  tiie  license,  under  the  said  reissued  Letters 
Patent  No.  12,192,  to  lease  licensed  motion  pic¬ 
tures  from  the  Licensed  Manufacturers  and  Im¬ 
porters  and  to  sub-lease  said  license  motion  pic¬ 
tures  for  use  only  on  projecting  machines  li¬ 
censed  by  the  Licensor  under  Letters  Patent 
owned  by  it. 

(2)  The  Licensee  covenants  and  agrees  to  con¬ 
form  with  and  strictly  adhere  to  and  be  bound  by 
all  of  the  “Conditions  of  License”  hereinafter  set 
forth,  and  to  and  by  any  and  all  future  changes  in 
or  additions  thereto,  and  further  agrees  not  to  do 
or  softer  any  ol  the  acts  or  things  thereby  prohib¬ 
ited,  and  that  the  Licensor  may  place  and  publish 
the  Licensee’s  name  in  its  removal  or  suspended 
list,  in  the  event  of  the  termination  of  this  agree¬ 
ment  b.vtiie  Licensor,  or  In'  casooTnnyvrolnHon 
thereof,  and  may  direct  the  Licensed  Manufac¬ 
turers  and  Importers  not  to  lease  licensed  motion 
pictures  to  the  Licensee,  the  Licensee  hereby  ex¬ 
pressly  agreeing  that  such  Licensed  Manufactur¬ 
ers  and  Importers  shall  have  the  right  to  cease 
such  leasing  when  so  directed  by  the  Licensor; 


(Complaint— Exhibit  A.)  Ii)5 

and  the  Licensee  further  agrees  that  the  signing 
of  tins  agreement  constitutes  a  cancellation  of  any 
or  all  agreements  for  the  sale  of  licensed  motion 
pictures  made  prior  to  this  agreement  by  and  be¬ 
tween  the  Licensee  and  any  or  all  licensed  manu¬ 
facturers  or  importers,  except  as  to  any  clause  in 
said  agreements  relating  to  the  return  of  motion 
picture  film  to  the  several  licensed  manufactur¬ 
ers  or  importers.  It  is  further  understood  and 
agreed  by  the  Licensee  that  the  license  hereby 
granted  is  a  porsonal  one  and  not  transferrablo  or 
assignable,  and  the  Licensee  hereby  recognises  *4^ 
and  acknowledges  the  validity  of  the  suid  reissued 
Letters  Patent  No.  12,192. 

Conditions  of  License. 

1.  From  the  date  of  this  agreement  the  Licensee 
shall  not  buy,  lease,  rent,  or  otherwise  obtain  any 
motion  pictures  other  than  licensed  motion  pic¬ 
tures  and  shall  dispose  of  any  motion  pictures  only 
by  the  sub-leasing  thereof  under  the  conditions 
hereinafter  sot  forth. 

2.  The  ownership  of  each  licensed  motion  pic-  '47 
tore  leased  under  this  agreement  shall  remain  in 

the  Licensed  Manufacturer  or  Importer  from 
whom  it  may  have  been  leased,  the  Licensee,  by 
the  payment  of  the  leasing  price  acquiring  only 
the  license  to  sub-let  such  motion  picture  subject 
to  the  conditions  of  this  agreement.  Such  license 
for  any  motion  picture  shall  terminate  upon  the 
broach  of  this  agreement  in  regard  thereto,  and 
the  Licensed  Manufacturer  or  Importer  from 
whom  it  may  have  been  leased  shall  have  the  right 
to  immediate  possession  of  such  motion  picture, 


DO 

148  (Complaint— Exhibit  A.) 

without  liability  for  any  leasing  price  or  other 
sun),  which  the  Licensee,  or  the  person  in  whoso 
possession  said  motion  picture  is  found,  may  have 
paid  therefor. 

3.  The  Licensee  shall  not  sell  nor  exhibit  li¬ 
censed  motion  pictures  obtained  from  any  Li¬ 
censed  Manufacturer  or  Importer,  either  in  the 
United  States  or  elsewhere,  but  shall  only  sub-let 
such  licensed  motion  pictures  [and  only  for  use  in 
the  United  States  and  its  territories]*  and  only 

149  to  exhibitors  who  shall  exclusively  exhibit  li¬ 
censed  motion  pictures,  but  in  no  case  shall  the 
exhibitor  be  permitted  to  sell  or  sub-let  or  other¬ 
wise  dispose  of  said  licensed  motion  pictures. 

4.  The  leasing  price  to  be  paid  by  the  Licensee 
to  the  Licensed  Manufacturers  or  Importers,  or 
the  terms  of  payment  for  or  shipment  of  licensed 
motion  pictures,  shall  in  no  case  bo  loss  or  more 
favorable  to  the  Licensee  than  that  defined  in  the 
leasing  schedule  embodied  in  this  agreement,  or 
any  other  substitute  leasing  schedule,  which  may 
bo  regularly  adopted  by  the  Licensor,  and  of  which 

*5°  notice  shall  be  given  to  the  Licensee  hereafter. 

5.  To  permit  the  Licensee  to  take  advantage  of 
any  standing  order  leasing  price  mentioned  in  such 
schedule,  such  standing  order  with  any  Licensed 
Manufacturer  or  Importer  shall  bo  for  one  or 
more  prints  of  each  and  every  subject  regularly 
produced,  and  offered  for  lease'  by  such  manu¬ 
facturer  or  importer  as  a  standing  order  subject 
and  not  advertised  as  special  by  such  Licensed 


51 

(Com  pi a  in  l—Exh  ih  it  A. ) 

Manufacturer  or  Importer;  and  shall  remain  in 
force  for  not  less  than  fourteen  (14)  consecutive 
days.  Any  standing  order  may  be  cancelled  or 
reduced  by  the  Licensee  on  fourteen  (14)  days’ 
notice.  Lxtra  prints  in  addition  to  a  standing 
order  shall  be  furnished  to  the  Licensee  at  tko 
standing  order  leasing  price. 

0.  The  Licensee  shall  not  sell,  rent,  or  otherwise 
dispose  of,  either  directly  or  indirectly,  any  li¬ 
censed  motion  pictures  (however  the  same  shall 
have  boon  obtained),  to  any  persons,  linns  or  cor¬ 
porations  or  agents  thereof,  who  may  bo  engaged 
either  directly  or  indirectly  in  selling  or  renting 
motion  picture  films. 

7.  The  Licensee  shall  not  make  or  cause  to  be 
made,  or  permit  others  to  make  reproductions  or 
so-called  “dupes”  of  any  licensed  motion  pic¬ 
tures,  nor  soli,  rent,  loan  or  otherwise  dispose  of 
or  deal  in  any  reproductions  or  “dupes”  of  any 
motion  pictures. 

8.  The  Licensee,  shall  not  deliberately  remove 
the  trademark  or  trade-name  or  title  from  any  li¬ 
censed  motion  picture,  nor  permit  others  to  do  so, 
but  in  case  any  title  is  made  by  the  Licensee,  the 
Manufacturer’s  name  is  to  be  placed  thereon,  pro¬ 
vided  tlint  in  making  any  title  by  the  Licensee,  the 
Manufacturer’s  trademark  shall  not  be  repro¬ 
duced. 

0.  The  Licensee  shall  return  to  each  Licensed 
Manufacturer  or  Importer  (without  receiving  any 
payment  therefor,  except  that  the  said  Licensed 
Manufacturer  or  Importer  shall  pay  the  trans- 


■54 


( Com  phi  ill  t — Exit  ihi  I  .4.) 


portalion  charges  incident  to  the  return  of  the 
sumo)  on  the  first  day  of  every  month  commenc¬ 
ing  seven  months  from  the  first  day  of  the  month 
on  which  this  agreement  is  executed,  an  equiva¬ 
lent  amount  of  positive  motion  picture  film  in  run¬ 
ning  feet  (not  purchased  or  leased  over  twelve 
months  before)  and  of  the  make  of  the  said  Li¬ 
censed  Manufacturer  or  Importer,  equal  to  tho 
amount  of  licensed  motion  pictures  that  wus  so 
leased  during  the  seventh  month  preceding  tho 
day  of  each  such  return  with  the  exception,  how- 
155  over,  that  whore  any  such  motion  pictures  are  de¬ 
stroyed  or  lost  in  transportation  or  otherwise,  and 
satisfactory  proof  is  furnished,  within  fourteen 
(14)  days  after  such  destruction  or  loss,  to  tile 
Licensed  Manufacturer  or  Importer  from  whom 
such  motion  picture  was  leased  the  Licensed  Man¬ 
ufacturer  or  Importer  shall  deduct  the  amount  so 
destroyed  or  lost  from  tho  amount  to  he  returned. 

10.  The  Licensee  shall  not  sell,  rent,  sub-let, 
loan  or  otherwise  dispose  of  any  licensed  motion 
pictures  (however  the  same  limy  have  boon  ob¬ 
tained)  to  any  person,  firm  or  corporation  in  the 
'5  exhibition  business,  who  may  have  violated  any 
of  the  terms  or  conditions  imposed  by  the  Li¬ 
censor  through  any  of  its  licensees  and  of  which 
violation  the  present  Licensee  may  have  had  no¬ 


il.  The  Licensee  shall  not  sub-lease  licensed 
motion  pictures  to  any  exhibitor  unless  a  contract 
with  said  exhibitor  (satisfactory  in  form  to  the 
Licensor)  is  first  exacted,  under  which  the  exhi¬ 
bitor  agrees  to  conform  to  all  the  conditions  and 
stipulations  of  the  present  agreement  applicable 


( Complaint — Exhibit  A.)  ,  ^ 

to  tho  exhibitor;  and  in  the  case  of  an  exhibitor 
who  may  operate  more  than  a  single  place  of  ex¬ 
hibition,  a  similar  contract  shall  ho  exacted  in 
connection  with  each  place  so  operated,  and  sup¬ 
plied  with  licensed  motion  pictures  by  the  Li¬ 
censee. 

12.  -After  February  1st,  not),  the  Licensee  shall 
not  sub-lease  any  licensed  motion  pictures  to  any 
exhibitor  unless  each  motion  picture  projecting 
machine  on  which  tho  licensed  motion  pictures 

are  to  bo  used  by  such  exhibitor  is  regularly  li-  ■  58 
censed  by'  tho  Motion  Picture  Patents  Com¬ 
pany,  and  the  license  fees  therefor  have  been 
paid;  and  the  Licensee  shall,  before  supplying 
such  exhibitor  with  licensed  motion  pictures, 
mail  to  tho  Motion  Picture  Patents  Company, 
at  its  office  in  New  York  City,  a  notice,  giving  the 
name  of  tho  exhibitor,  tho  name  and  location  of 
tho  place  of  exhibition  (and,  if  requested  to  do 
so  by  tho  Licensor,  its  seating  capacity,  hours  of 
exhibition  and  price  of  admission,  and  the  num¬ 
ber  and  make  of  the  licensed  projecting  machine 
or  machines),  together  with  the  date  of  the  com¬ 
mencement  of  the  subleasing,  all  in  a  form  ap-  1  *9 
proved  by  the  Licensor.  The  Licensee,  when 
properly  notified  by  the  Licensor,  that  the  license 
fees  of  any  exhibitor  for  any  projecting  machine 
have  not  been  paid,  and  that  the  license  for  such 
projecting  machine  is  terminated,  shall  immedi¬ 
ately  cease  to  supply  such  exhibitor  with  licensed 
motion  pictures. 

13.  The  Licensee  agrees  to  order  during  each 
month  while  this  agreement  is  in  force,  for  ship¬ 
ment  directly  to  the  place  of  business  of  the  Li- 


04 

j  gQ  (Complaint— Exhibit  A.) 

conscc  in  the  City  for  which  this  agreement  is 
signed,  licensed  motion  pictures,  the  net  leasing 
prices  for  which  shall  amount  to  at  least  $2,000. 

14.  The  Licensee  shall,  on  each  Monday  during 
the  continuance  of  this  agreement,  make  or  mail 
payment  to  each  Licensed  Manufacturer  and  Im¬ 
porter  for  all  invoices  for  licensed  motion  pic¬ 
tures  which  have  been  received  by  tbo  Licensee 
during  the  preceding  week. 

1 6  ■  15.  This  agreement  shall  extend  only  to  the 

place  of  business  for  the  sub-leasing  of  motion 
pictures  maintained  by  tbe  Licensee  in  the  City 
for  which  this  agreement  is  signed,  and  the  Li¬ 
censee  agrees  not  to  establish  or  maintain  a  place 
of  business  for  tbe  sub-leasing  of  motion  pictures, 
or  from  which  motion  pictures  are  delivered  to 
exhibitors,  in  any  other  City,  unless  an  agreement 
for  such  other  City,  similar  to  the  present  agree¬ 
ment,  is  first  entered  into  by  and  between  the  Li¬ 
censee  and  the  Licensor. 

1G.  This  Licensor  agrees  that  before  licensing 

162  any  person,  firm  or  corporation  in  the  United 
States  (not  including  its  insular  territorial  pos¬ 
sessions  and  Alaska)  to  lease  licensed  motion  pic¬ 
tures  from  Licensed  Manufacturers  and  Import¬ 
ers  and  to  sub-lease  such  motion  pictures,  it  will 
exact  from  each  such  licensee,  an  agreement  sim¬ 
ilar  in  terms  to  the  present  agreement,  in  order 
that  all  licensees  who  may  do  business  with  the 
Licensed  Manufacturers  and  Importers  will  be 
placed  in  a  position  of  exact  equality. 


(Complaint— Exhibit  A.)  ,63 

If).  It  is  understood  and  specifically  covenanted 
by  the  Licensee,  that  the  Licensor  may  terminate 
this  agreement  on  fourteen  (14)  days  written  no- 
tico  to  the  Licensee  of  its  intention  so  to  do,  and 
that  if  the  Licensee  shall  fail  to  faithfully  keep 
and  perform  the  foregoing  terms  and  conditions 
of  lease,  or  any  of  them,  or  shall  fail  to  pay  the 
leasing  price  for  any  motion  pictures  supplied  by 
any  Licensed  Manufacturer  or  Importer  when 
duo  and  payable,  according  to  the  terms  of  this 
agreement,  tbo  Licensor  shall  have  the  right  to 
place  the  Licensee’s  name  on  an  appropriate  sus-  164 
pended  list,  which  the  Licensor  may  publish  and 
distribute  to  its  other  licensees  and  to  exhibitors 
and  to  flic  Licensed  Manufacturers  and  Import¬ 
ers  and  to  direct  the  Licensed  Manufacturers  and 
Importers  not  to  lease  licensed  motion  pictures 
to  the  Licensee,  and  the  exercise  of  either  or  both 
of  these  rights  by  the  Licensor  shall  not  ho  con¬ 
strued  us  a  termination  of  this  license,  and  the 
Licensor  shall  also  have  the  right  in  such  case, 
upon  appropriate  notice  to  the  Licensee,  to  im¬ 
mediately  terminate  the  present  license,  if  the 
Licensor  shall  so  elect,  without  prejudice  to  the 
Licensor’s  right  to  sue  for  and  recover  any  dam-  '®5 
ages  which  may  have  been  suffered  by  such  breach 
or  non-compliance  with  the  terms  and  conditions 
hereof  bv  the  Licensee,  such  breach  or  non-com¬ 
pliance  constituting  an  infringement  of  said  re¬ 
issued  Letters  Patent.  It  is  further  agreed  by  the 
Licensee  that  if  this  agreement  is  terminated  by 
the  Licensor  for  any  breach  of  any  condition  here¬ 
of,  the  right  to  possession  of  all  licensed  motion 
pictures  shall  revert  twenty  days  after  notice  of 
such  termination,  to  the  respective  Licensed 
Manufacturers  and  Importers  from  whom  they 


A  rebate  of  10%  will  bo  allowed  on  all  leases 
ol  licensed  motion  pictures,  except  at  the  7  cent 
and  5  cent  prices,  which  are  net;  said  rebates  to 
be  due  and  payable  between  the  1st  and  loth  days 
of  each  of  the  months  of  March,  May,  July,  Sep¬ 
tember,  November  and  January,  on  all  films  leas¬ 
ed  during  the  two  months  preceding  each  said 
period,  provided  all  the  terms  and  conditions  of 
this  license  agreement  have  been  faithfully  ob¬ 
served. 


(Complaint — Exhibit  A.) 

TERMS. 

All  shipments  are  made  F.  0.  B.  lessor’s  office 
at  lessee’s  risk. 

All  motion  picture  films  are  to  be  shipped  to 
lessee’s  office  only. 

The  lengths  at  which  motion  picture  films  are 
listed  and  leased  are  only  approximate. 

Motion  Piotuiie  Patents  Company 

By  D.  MacDonald,  General  Manager. 

Licensee’s  Signature 

Greater  New  York  Film  Rental  Co. 

Secy. 

Place  of  business  for  which  this  license  is  grant¬ 
ed  Street  and  No.  24  Union  Square 

City  New  York  State  New  York. 


Date  Jan.' 20/09. 


58 

SUPREME  COURT, 

NEW  YORK  COUNTY. 


Greater  New  York  Film  Rental 
Company, 

Plaintiff, 

against 

Motion  Picture  Patents  Com- 
pany  nnd  others, 

''  Defendants. 

State  and  County  op  New  York — ss: 

William  Fox,  being  duly  sworn,  says : 

I  am  President  of  the  plaintiff  in  this  action, 
nnd  linve  rend  tile  accompanying  complaint,  veri¬ 
fied  hy  mo,  nnd  all  the  allegations  therein  con¬ 
tained,  not  stated  to  he  made  upon  information 
and  belief,  are  true  of  my  own  knowledge. 

I  first  became  interested  in  the  motion  picture 
1  74  business  in  1900,  as  an  exhibitor,  and  from  time 
to  time  acquired  control  of  various  motion  picture 
theatres,  now  numbering  ton  of  the  largest,  best 
equipped  and  best  patronized,  in  the  Boroughs  of 
Manhattan  nnd  Brooklyn,  City  of  Now  York,  in 
which  motion  pictures  obtained  from  the  defend¬ 
ants  designated  in  the  complaint  as  licensed  manu¬ 
facturers  have  been  and  still  are  displayed  to  the 
public. 

The  plaintiff  was  organized  in  March,  1907,  for 
the  purpose  of  purchasing  projecting  machines 
and  films,  and  in  turn  leasing  machines  and  films 


59 

( Affidavit  of  William  Fox.)  ,  75 

to  exhibitors.  The  business  of  the  plaintiff  is 
and  ever  since  its  organization  has  boon,  that  of  a 
rental  agency,  the  nature  of  which  is  explained 
in  the  complaint,  and  appears  heroin. 

From  the  time  of  its  organization,  until  Jan¬ 
uary  20, 1909,  when  it  perforce  uecnptod  the  license 
agreement,  Exhibit  A,  attached  to  the  complaint, 
the  plaintiff  carried  on  its  business  hy  purchas¬ 
ing  outright  both  projecting  machines  and  films, 
and  particularly  the  latter,  from  all  the  defend¬ 
ants  heroin  designated  in  the  complaint  as  licens¬ 
ed  manufacturers,  except  the  Melies  Manufnctur-  '  76 
ing  Company.  Until  about  January,  1908,  those 
manufacturers  were  not  “licensed  manufactur¬ 
ers,”  but  were  carrying  on  business  independently 
of  one  another,  and  there  was  active  competition 
among  them.  They  sold  both  apparatus  and  films 
outright,  both  to  rental  agencies  and  to  exhibitors, 
and  served  all  comers  without  discrimination. 

There  were,  also,  other  importers  of  foreign  film 
doing  business  in  the  United  States,  and  the  plain¬ 
tiff  dealt  with  them  prior  to  the  early  part  of  1908, 
when  it  was  obliged  to  cease  such  dealings,  owing 
to  the  restrictions  placed  upon  the  rental  agencies 
by  flic  manufacturers  when  they  combined  under  177 
the  license  of  the  Edison  Manufacturing  Com¬ 
pany,  as  next  hereinafter  stated. 

In  or  about  January,  1908,  the  defendants  desig¬ 
nated  in  the  complaint  ns  licensed  manufacturers, 
except  the  Melies  Manufacturing  Company  and 
George  Ivloine  and  the  American  Mutoscope  & 
Biograph  Company,  accepted  licenses  from  the 
Edison  Manufacturing  Company  to  manufacture 
under  the  patents  owned  and  controlled  by  that 
company.  Theretofore,  a  number  of  those  manu¬ 
facturers  had  been  manufacturing,  ns  I  under- 


(Affidavit  of  William  Fox.) 


stand,  under  patents  owned  or  controlled  by  thp 
American  Mutoscope  &  Biogrnph  Company,  or 
without  any  licenses  whatever,  and  in  defiance  of 
the  patents  both  of  the  Edison  Company  and]  of 
the  Mutoscope  Company. 

There  was  much  litigation  between  the  Edison 
Company  and  the  Mutoscope  Company,  involving 
also  manufacturers  under  those  respective  pat¬ 
ents,  and  also  rental  agencies  and  exhibitors  using 
machines  and,  films  claimed  by  the  one  company 
or  the  other  to  be  infringement's. 

>79  After  the  aforesaid  manufacturers  accepted 
Edison  licenses,  there  was  still  active  competition 
on  the  part  of  Kleine,  who  was  an  importer  ,  of 
loreign  films,  and  the  Mutoscope  .Company  and 
its  licensees  operating  under  its  patents.  There 
was  a  number  of  manufacturers  so  operating 
under  the  Mutoscope  patents. 

The  manufacturers  under  the  Edison  license 
refused  to  sell  apparatus  or,  films  to  any  agencies 
or  exhibitors  that  would  not  deal  exclusively  with 
them.  The  Mutoscope  Company  and  the  manu¬ 
facturers  operating  under  it's  patents  made  no 
j  go  such  restrictions,  and  sold  without  discrimination. 
The  apparatus  and  films  produced  under  the  Edi- 
son  piilonts  wore  generally  regarded  as  superior 
to  the  others,  and  the  result  was  that  the  manu¬ 
facturers  under  those  patents  acquired  a  largo 
part  of  the  business,  although  the  rival  manu¬ 
facturers  were  carrying  on  an  extensive  trade. 

The  prices  of  film  produced  by  the  manufactur- 
-•■s  undei  the  Edison  license  varied  until  about 
Juno  1,  1908,  when  the  Edison  Company  reduced 
its  price  from  12  cents  per  running  foot  for  imme¬ 
diate  release  film— meaning  film  to  be  used  by  all 
of  the  rental  ugencies  throughout  the  United 


(Affidavit  pf  William  Fax.)  ,g, 

States  on  the  same  designated  dale— to  9  cents 
per  running  foot,  loss  10  per  cent  if  paid  for 
within  one  week  after  delivery.  The  Vitagraph 
Company  reduced  its  price  for  the  same  kind  of 
film  from  10,  12  and  14  cents  pur  running  foot  to 
9  cents  per  running  foot,  less  10  per  cent  if  paid 
for  within  one  week  after  delivery.  All  the  other 
manufacturers  under  the  Edison  license  made  a 
uniform  price  of  9  cents  per  running  foot,  loss 
the  10  per  cent  rebate.  Prior  to  June  1st,  the 
various  prices  had  been  net,  without  any  rebate, 
although  the  purchasers  were  required  to  pay  for  182 
the  film  either  C.  0.  D.  or  within  one  week,  and 
unless  they  did  so  no  more  film  were  shipped  to 
them. 

The  object  of  making  the  price  9  cents  per  run¬ 
ning  foot,  loss  the  10  per  cent  rebate  was  to  en¬ 
able  these  manufacturers  operating  under  the 
Edison  license  to  control  the  business  and  drive 
the  other  manufacturers  and  importers  out  of  the 
market.  The  cost  of  importing  foreign  film,  after 
payment  of  duly,  was  fully  8  cents  per  running 
foot,  and  the  price  made  by  these  licensed  manu¬ 
facturers — 9  cents,  less  10  per  cent  rebate — 
brought  their  price  down  practically  to  the  ac-  1  3 
tunl  cost  of  importing,  or  certainly  of  importing 
and  handling  the  foreign  film.  The  result  was, 
that  the  Edison  licensees  acquired  85  or  90  per¬ 
cent  of  the  whole  business  of  the  country. 

In  the  summer  or  early  fall  of  1908,  the  advis¬ 
ability  of  a  combination  between  the  Edison  li¬ 
censees  and  the  American  Mutoscope  &  Biograph 
Company  and  its  followers  must  have  become  ap¬ 
parent,  and  this  was  furthered  by  the  active  and 
constant  litigation  between  the  Edison  Company 
and  the  Mutoscope  Company  over  their  patents. 


1 84 


(Affidavit  of  William  Fox.) 


Between  June  1st  nml  September  1st,  1908,  the 
Edison  licensees  had  so  largely  acquired  the  bus¬ 
iness  of  the  film  rental  agencies  and  exhibitors 
that  they  could  and  did,  on  September  1,  190S, 
increase  the  price  for  their  aforesaid  film  to  11 
cents  per  running  foot,  with  the  same  10  per  cent 
discount. 

It  was  staled  by  some  of  the  manufacturers,  at 
a  mooting  of  the  film  rental  agencies  in  the  sum¬ 
mer  of  1008,  that  the  Edison  licensees  would 
make  a  uniform  price  of  9  cents,  with  the  10  per 
185  cent  rebate,  for  three  months  after  .Tune  1,  1908, 
for  the  purpose  of  driving  the  independents  out 
of  the  field.  As  has  been  stated,  Hint  purpose 
was  largely  accomplished  by  September  1,  1908, 
in  that  the  rental  agencies  and  exhibitors,  to  the 
extent  of  85  or  90  per  cent  of  the  whole  number, 
bought  their  film  from  the  Edison  licensees  and 
left  the  so-called  independent  manufacturers  and 
importers.  Having  accomplished  their  purpose, 
the  Edison  licensees  increased  their  price  to  11 
cents,  loss  10  per  cent,  ns  has  boon  staled. 

The  situation  was  ripe  for  a  combination  bo- 
jgg  tween  the  Edison  licensees  and  their  rivals,  the 
Mutosoopo  Company  and  its  followers,  and  the 
result  was  the  formation  of  the  defendant  Pat¬ 
ents  Company  in  or  about  December,  1908.  Since 
that  time,  the  uniform  price  of  11  cents  per  run¬ 
ning  foot,  loss  10  per  cent  rebate,  has  boon  main¬ 
tained  by  the  Patents  Company  for  what  are 
known  as  standing  orders;  that  is,  the  rental 
agency  is  required  to  keep  a  standing  order  for 
a  certain  number  of  reels  of  film  per  week  with 
some  or  all  of  the  manufacturers,  and  this  can  be 
cancelled  only  on  two  weeks’  notice.  For  film  not 
included  in  the  standing  order,  the  agency  must 


(Affidavit  of  William  Fox.) 

pay  the  list,  price,  which  is,  and  has  been  since  the 
I  ntents  Company  was  formed,  13  cents  per  run- 
ning  loot,  while  betore  the  Patents  Company  was 
formed  it  was  12  cents  per  running  foot. 

The  difference  with  regard  to  films  since  the 
combination  is  not  only  what  has  already  been 
mentioned,  but  that  before  the  combination  the 
rental  agencies  became  the  absolute  owners  of 
the  film,  and  that;  since  the  combination  they  are 
mere  lessees,  but  that,  pursuant  to  the  provisions 
of  the  license  agreement,  like  Exhibit  A  attached 
to  the  complaint;,  the  agencies  are  required  to  re¬ 
turn  the  film  to  the  manufacturers  within'  a  com-' 
pnrativcly  short  period,  long  before  the  life  or 
usefulness  of  the  films  has  been  exhausted.  The 
agencies,  while  thus  paying  the  full  value  of  the 
.films,  have  only  a  restricted  use  of  them,  and  the 
supply  is  thus  much  curtailed.. 

Before  the  combination  among  the  defendants 
under  the  Patents  Company  was  formed,  there 
wore  about  120  rental  agencies  throughout  the 
United  States  buying  apparatus  and  films  from 
the  defendants  now  designated  as  licensed  manu¬ 
facturers,  and  engaged  in  leasing  such  apparatus 
and  films,  particularly  the  latter,  to  exhibitors. 
About  20  of  such  rental  agencies  existed  and  car¬ 
ried  on  business  in  the  Borough  of  Manhattan, 
City  of  New  York.  After  the  combination  was 
effected,  the  defendant  Patents  Company  refused 
to  license  many  of  the  existing  rental  agencies, 
and  reduced  the  number  in  the  United  States  to 
about  75,  which  received  licenses  from  the  Pat¬ 
ents  Company,  of  which  number  9  wore  licensed 
in  the  Borough  of  Manhattan. 

Those  75  rental  agencies  have  all,  except  the 
plaintiff,  been  driven  out  of  business  by  the  do- 


( Affidavit  of  William  Fox.) 


^y/(& 


OKT,/'^  r 


fondants  sineo  tho  combination  was  effected.  Of 
tlio  9  licensed  in  the  Borough  of  Manhattan,  2 
/were  eliminated  by  tlio  arbitrary  cancellation  of 
^  their  licenses  without  cause,  and  without  the  pay¬ 
ment  to  the  owners  of  anything  whatever,  and 
the  General  Film  Company  succeeded  to  their 
‘  business.  Of  the  remaining  7, -the  business  and 
good-will  of  6  wore  sold  to  the  General  Film 
|  Company  on  terms  dictated  by  Mr.  J.  J.  Kennedy 
nnd  his  associates,  including  the  licensed  manu- 
i  lecturers,  controlling  tho  Patents  Company  nnd 
91  the  General  Film  Company.  The  owners  of  those 
agencies  had  practically  no  option  about  selling. 
They  were  confronted  with  the  alternative  of  ac¬ 
cepting  tho  terms  offered  them  or  suffering  the 
cancellation  of  their  licenses  theretofore  granted 
by  tho  Patents  Company. 

J  B.v  similar  means,  all  the  licensed  rental 
/  agencies  existing  in  the  United  States  outside  of 
tho  Borough  of  Manhattan  wore  eliminated,  some 
by  arbitrary  cancellation  of  their  licenses,  and 
others  by  juilaixxuljside  to  the  General  Film  Com- 
.  pany  under  threats  ot  such  cancellation. 

x  I  «m  well  acquainted  with  most  of  the  officers 
>2  and  directors  of  the  Patents  Company  and  the 
General  Film  Company,  and  have  had  close 
observation  of  they>hgain.es§jinitluicls  for  about 
three  years,  and'-pknow  wheroofj  spoafc'N 


A  _  The  defendant  Parents  Company  was  organ- 
\  ized  in  or  about  December,  1908,’  and  in  that 

''  1  month  t;he  leading  spirits  in  the  Patents  Com- 

,J>  >  .  P<any,  viz. :  Messrs.  Frank  U.  '  Dyer,  J.  ,T. 
•  )/«.^'Ko,1,lec1y’  H-  K  Marvin,  J.  A.  Borst,  and  George 

P.  .A 


( Affidavit  of  William  Fox.)  |g3 

Kleine,  hold  a  meeting  in  the  Borough  of  Man¬ 
hattan,  City  of  Now  York,  with  representatives 
of  all  the  defendants  herein  designated  as  licens¬ 
ed  manufacturers,  except  tho  Melics  Manufactur¬ 
ing  Company.  The  proceedings  of  that  meeting 
have  since  become  notorious  in  the  trade,  and  an 
outline  of  the  plan  there  evolved,  couched,  in 
euphemistic  terms,  and  without  disclosure  of  all 
the  details,  was  afterwards  stated  to  me  and  to 
other  representatives  of  rental  agencies  at  a 
meeting  hold  in  New  York  a  little  later,  to  which 
I  shall  presently  refer. 

At  the  first  meeting  m  New  York,  the  Patents 
Company  and  tho  licensed  manufacturers  entered 
into  agreements,  by  which  all  the  patents  owned 
or  controlled  by  the  manufacturers,  and  which 
are  specified  in  the  complaint,  wore  assigned  to 
the  Patents  Company,  and  tho  licensed  manufac¬ 
turers  accepted  identical  licenses  enabling  them 
to  operate  under  said  patents,  the  substance  of 
which  license  agreement  is  set  forth  in  the  com¬ 
plaint 

It  was  also  agreed  at  said  meeting,  by  the  Pat¬ 
ents  Company  and  tho  manufacturers,  as  is  evi¬ 
dent  from  the  terms  of  the  licenses  to  rental  '95 
agencies,  of  which  Exhibit  A  attached  to  tho  com¬ 
plaint  is  a  specimen,  that  tho  prices  for  leasing 
films  should  be  fixed  and  maintained,  and  they 
were  fixed,  and  have  ever  since  been  maintained 
at  the  sums  stated  in  said  Exhibit  A,  to  wit : 


GG 

( Affidavit  of  William  Fox.) 

Said  prices,  except  the  5-cont  and  7-ee.nt  rates, 
are  subject  to  a  rebate  of  10  per  cent  payable  be¬ 
tween  the  1st  and  loth  days  of  each  of  the  months 
March,  May,  .Inly,  September,  November  and  Jan¬ 
uary,  on  all  films  leased  during  the  two  months 
preceding  each  said  period,  provided  all  the  lorms 
and  conditions  of  the  license  agreement  have  been 
faithfully  observed. 

Shortly  after  this  first  meeting  another  meet¬ 
ing  was  called  in  New  York,  which  was  attended 
by  representatives  of  all  or  nearly  all  the  film 
197  rental  agencies  in  the  United  Stales  and  by  repre¬ 
sentatives  of  all  or  nearly  all  of  the  defendants 
dcsiiriiutcd  as  licensed  manufacturers  (except  the 
Melies  Manufacturing  Company,  which  was  not 
at  that  time  in  existence).  I11  further  reference  in 
this  affidavit  to  the  licensed  manufacturers  it 
should  bo  understood  that  the  Melies  Manufac¬ 
turing  Company  is  not  included,  but  the  George 
Melies  Manufacturing  Company,  n  corporation 
doing  business  in  Chicago  and  engaged  in  manu¬ 
facturing  film,  is  included.  This  meeting  was 
also  attended  bv  a  number  ol  the  officers  of  the 
Patents  Company,  including  Dwight  Macdonald, 
'9°  General  Manager  of  the  Patents  Company. 

The  representatives  of  the  rental  agencies  wore 
informed  that  the  .manufacturers  of  film  and  ma¬ 
chines  laid  all  taken  licenses  from  the  Patents 
Company  and  that  films  and  machines  would  no 
longer  be  sold  outright,  but  only  leased,  and  only 
to  such  rental  agencies  as  should  bo  licensed  by 
the  Patents  Compuny.  Mr.  Macdonald  read  the 
license  agreement  which  all  rental  agencies  would 
be  required  to  sign.  It  was  in  all.  respects  like 
Exhibit  A  attached  to  the  complaint  herein. 

There  was  most  vehement  protest,  on  the  part 
ot  the  representatives  of  the  rental  agencies,  but 


( Affidavit  of  William  Fox.) 

it  was  useless  and  all  attempts  to  secure  modifica¬ 
tion  of  the  provisions  of  the  license  agreement 
were  in  vain,  and  wo  all  finally  realized  that  our 
only  choice  was  either  to  accept  the  terms  of  the 
license  agreement  or.g^oiit,of  business.  , . . • — 

I  objected  vigorously  to  signing  the  agreement, 
hut  finally  accepted  it  in  hehalf  of  the  plaintiff 
because  there  was  no  alternative  if  the  plaintiff 
wished  to  continue  business. 

Ever  since  January  20,  1009  when  said  Exhibit 
A  was  signed  the  plaint! tl  has  fully  performed  all 
the  terms  and  conditions  of  that  agreement  on 
its  part. 

Pursuant  to  one  of  the  provisions  of  the  agree¬ 
ment  the  plaintiff  has  returned  to  the  licensed 
ni.nnu  lecturers  film  which  it  had  purchased  out¬ 
right  and  paid  for,  and  which  hud  cost  the  plain¬ 
tiff  upwards  of  *:i0(),000,  and  which  at  the  time  r 
of  its  return  was  fairly  worth  upwards  of  $100,-  \ 
000.  To  bo  sure,  its  market  value  had  been  de-  ' 
stroyod  by  the  action  of  the  Patents  Company  •  j 
and  the  licensed  manufacturers  in  prohibiting  the 
use  of  that  film,  but  it  was  worth  fully  $100,000 
for  exhibition  purposes  if  it;  could  have  been  used 
or  sold.  : 

Ill  the  early  part  of  September,  10.1.1  I  was 
sent  for  by  Mr.  P.  L.  Waters,  General  Manager 
of  the  General  Film  Company,  and  called  upon 
him  at  his  office  111  the  office  of  the  General  Film 
Company,  200  Fifth  Avenue,  New  York  City. 

1  remember  our  conversation  quite  distinctly, 
and  quote  it  ns  nearly  as  I  can  recollect,  in  the 
words  used: 


mt  to  advise  you,  in  a  friendly 
iv  is  the  right  time  to  offer  the 


(Affidavit  of  William  Fox.) 


Grantor  Now  York  Film  Rental  Exchange 
for  sale  to  tho  General  Film  Company.” 


“Wlmt  do  you  moan  by  that'/  Why  is  this 
tho  right  time  any  more  than  any  time?  I 
lmvo  no  idea  of  soiling  our  business.  Wo  are 
doing  well  enough.” 

Ho  said: 


203  “Now,  Fox,  I  want  to  bo  your  friend.  You 

know  that  I  am  tho  General  Manager  of  tho 
General  Film  Company,  and  I  know  tho  in¬ 
side  workings,  and  my  advice  to  you  would 
be  to  offer  your  plant  for  sale  now,  for  if  you 
don’t  you  might  never  have  another  oppor¬ 
tunity.” 

I  said: 


“Now,  Waters,  what  do  you  mean  by  that? 
Tf  it  is  the  idea  of  the  General  Film  Com¬ 
pany  and  tho  Motion  Picture  Patents  Com¬ 
pany  and  tho  manufacturers,  to  cancel  my 
license,  of  course  I  want  to  sell  my  plant  anil 
sell  it  quick.  If  you  don’t  contemplate  job¬ 
bing  me  and  cancelling  my  license,  why  then 
I  have  no  idea  of  selling  and  don’t  want  to 
sell  unless  I  can  sell  on  the  basis  of  the  earn¬ 


ing  capacity.  My  plant  earning  from  $(>(),- 
000  to  $75,000  last  year,  I  would  expect  any¬ 
where  from  $000,000  to  $750,000.” 

“Why”,  ho  said;  “Don’t  bo  foolish.  I 
don  t  say  that  we  are  going  to  cancel  vonr 
license,  and  I  don’t  say  that  wo  are  goiii"  to 
.lob  yoin,  but  I  will  advise  you  that  if  von 
don  t  offer  your  plant  for  sale  now,  as  I  said 
before,  I  don’t  think  you  will  get  another 


(Affidavit  of  William  Fox.) 


*nV-  0rs’  notJ l*o  frank  with  me?  If  it 

is  tno  idea  ot  your  Company  and  tho  Patents 
Company  to  have  my  license  taken  away,  why 
i  ca/fcoU  g0t  t0  t,l»°  “lm0st  nny  P™°  that 


“Under  the  circumstances,  you  claiming 
to  bo  my  friend,  try  and  get  for  mo  $150,000.” 


“N°w /ou  aro  00mi,)S  to  J’o«r  senses,  ex- 
S  r  i'  V’0,"  are.  asking  too  much  monov, 
but  I  think  that  this  would  bo  a  good  time  to 
call  in  my  friend  J.  J.  Kennedy  who,  vou  no 
doubt  know,  is  the  President  of  tho  General 
n  Jim  Company,  Treasurer  of  the  Motion 
iicture  Patents  Company  and  Vice-President 
ot  tlie  American  Mutoscope  &  Biograph  Com-  207 
pany.  He,  being  the  big  man  here  in  all  of  ' 
these  companies,  could  talk  to  you  officially 
and  whatever  lie  did  would  be  upheld  by  the 
various  companies  ho  represents.” 

He  then  brought  Mr.  Kennedy  in.  Mr.  Ken¬ 
nedy  said : 


{Affidavit  of  William  Fox.) 


“Mr.  Kennedy,  the  only  tiling  you  can  do 
l'or  me  is  to  assure  me  that  you  don’t  intend 
to  job  mo  by  cancelling  my  license.’’ 


“I  was  speaking  to 
buying  bis  exchange  f 
Company.  ’  ’ 


/  V  jf 

/A, 


“Have  you  got  a  price  in  mind,  Mr.  Pox 
as  to  wlmt  you  would  like  to  have  for  yom 
plant?”  J 

I  repeated  to  Kennedy  the  exact  conversation 
that  I  bad  with  Waters  in  the  first  instance, 
Kennedy  said: 

A  “Of  course  you  understand  the  selling  of 
/  your  plant  is  not  compulsory,  and  if  you  ex- 
/  poet  any  such  figures  ns  that,  why  go  right 
/  along  and  don’t  bother  about  us;  but  if  you 
want  oar  figures  I  would  bo  glad  to  lot  Vou 
know  bow  much  we  think  your  plant  is  worth 
and  that  is  made  up  in  table  form,  the  exact 
i  t  liA,  P“Kl  for  every  exchange  that 

''e  bought  throughout  the  country.  These 
of  film  f,™  mado  "P  recording  to  the  amount 
o  film  that  you  are  buying  and  according  to 
the  amount  of  customers  that  you  have  on 
your  books.” 


(Affidavit  of  William  Fox.) 


.  “Mr  Kennedy,  what  are  those  fin-ares? 

SSK-7"  1  “>  ‘  - 

Mr.  Kennedy  then  took  from  his  pocket  a 
1(3,101  1  :1  from  that  orand  |0 

up  Ins  figures  on  a  pad,  and  said: 

io  bij  ro  o  el  a  g  o  lie  sa  j  basis 
as  wo  have  bought  all  of  the  others— and  wo 
have  bought  them  all  over  the  oountry-you 
would  be  entitled  to  $85,000  plus  ninety  per 
cent,  of  the  price  that  you  paid  for  the  last 
week  pilot  to  out  taking  iiossession.  which 
would  bviiig  the  figures  up  between  $88,000 
and  $89,000.  Ion  know  the  having  of  these 
plants  is  not  all  velvet.  We  have  gone  to 

l9rnnoG!Titfl"7^,lclbo”sllt  P'«»ta  mid  paid 
$-.3,000  to  $.0,000  for  them  and  found  that 
they  were  running  on  a  basis  that  they  were 
losing-  $18,000  a  year,  and  only  by  the  com- 
billed  efforts  oi  this  great  big*  corporation  of 
ours  m  being  able  to  shift  new  customers  into 
that  exchange  and  taking  some  of  those  that 
\vere  a  great  distance  nwnv  from  that  ex¬ 
change  and  taking  care  of  them  with  one  of 
our  exchanges  nearer  to  that  customer,  wore 
we  able  to  put  some  of  those  plants  on  a  pav¬ 
ing  basis.” 


“  ■f  you  paid  anything  like  $25,000  or  $30,- 
000  for  u  plant  that  was  losing  $18,000  a 
year,  at  your  own  figures  any  price  that  I 
asked  for  mine,  considering  that  it  is  making 
between  $(>0,000  and  $75,000  a  year,  would 
not  be  too  large,  because  in  mine  you  have  a 
manufactured  business  of  a  great  earning 
capacity  and  without  it  being  controlled  by 


214 


( Affidavit  of  William  Fox.) 


your  great  big  corporation  and  without  your 
perfecting  economies  in  it,  that  business, 
'  oven  at  a  purchase  price  of  $000,000  would 
give  you  a  not  return  of  ton  per  cent.” 

Kennedy  said: 

“Of  course  we  are  not  buying  on  that  basis 
at  all.  Wo  are  only  buying  the  plants  that 
are  willing  to  sell  for  our  price.  Wo  give 
you  the  best  price  that  we  can  afford  to  pay. 
Wo  give  everybody  the  same  price.  Wo 
make  you  this  offer.  You  can  either  take  it 
or  let  it  go.” 

I  said: 

“Mr.  Kennedy,  if  that  is  the  best  that  you 
can  do  of  course  I  don’t  want  to  sell.  I  hope 
that  I  don’t  find  in  the  course  of  the  next 
week  or  month  or  two  months,  that  you  have 
found  some  potty  charge  or  other,  under 
which  you  will  cancel  my  license  in  view  of 
the  fact  of  my  not  wauling  to  sell  today.’’ 

Mr.  Kennedy  said : 

“If  your  license  is  cancelled.  Pox,  don’t 
blame  me.  I  am  now  talking  for  the  Gen¬ 
eral  Film  Company,  and  the  General  Film 
Company  is  not  cancelling  any  license  as  von 
know,  your  license  comes  from  the  Motion 
1  icture  Patents  Company.” 


“Mr.  Kennedy,  having  in  mind  the  close 
•  elat.onJnp  between  both  companies,  it  will 
bo  a  very  easy  matter 'for  you  to  arrange  to 
Imve  my  license  cancelled  if  yon  see  fit.” 


o  which  lie  replied: 


I  then  bade  Mr.  Kennedy  good-bye.  Mr. 
Wate.  accompanied  me  downstairs  to  the  cafe 
of  the  Filth  Avenue  building,  where  he  invited 
me  to  have  a  drink  with  him,  and  said: 

like  van  ,U  «  smart  fellow 

ike  jou  for  whom  I  have  had  a  high  regard, 
to  be  so  stupid  and  not  to  be  able  to  see  the 
conditions  ns  they  have  arisen.  Remember 
”"1®  ^  wheel  and  you  are  only 

a  smnll  chip  01  wood  in  the  wav  of  it  You 
don  t  suppose  that  I,  us  the  driver  of  my 

ol°'Zn!!n’,  ‘,"n  r'1’]?  !°  s)vorvu  n»y  wheel  out 
oi  the  load.  [  will  be  obliged  to  drive  over 
von  every  time  I  conic  across  you,  and  the 

crush  i7  ,0  tnllt  ,tll,s  ll01lv-v  wlleo1  will  soon 
uush  the  small  chip  of  wood  to  splinters. 
„n°w’  Jl  '  wore  y°"’.L  would  take  Kennedy’s 
close  friendship  for  you  would 
lend  mo  o  say  that  I  would  lie  glad  to  in- 
ercedc  with  Mr.  Kennedy  in  your  behalf  and 
uy.to  get  you  an  even  $100,000  for  your 
business.”  * 


I  thank  you  Very  much.  I  will  think  it 
over,  and  I  hope  that,  between  now  and  the 
time  when  I  have  thought  it  over,  that  I 
don’t  find  that,  you  have  been  the  cause  of 
having  my  license  cancelled  by  the  Patents 
Company.” 


That  ended  the  interview. 

I  lmd  no  further  conversation  with  anybody 
representing  the  Patents  Company  or  the  manu- 


(Affidavit  of  William  Fox.) 

facturors  or  the  General  Film  Company  until 
after  the  plaintiff  received  the  notice  of  cancel¬ 
lation  dated  November  14,  1911,  set  forth  in  the 
complaint. 

On  November  17,  191.1,  I  telephoned  Mr.  Ken¬ 
nedy  and  made  an  appointment  to  call  upon  him 
at  his  office  on  the  next  day  (the  18th).  I  had  an 
interview  with  him  on  that  day  at  winch  he  and 
I  were  the  only  ones  present.  The  conversation 
was  as  follows : 

I  said : 


“Mr.  Kennedy,  you  no  doubt  are  aware  of 
the  fact  that  the  Greater  Now  York  Film 
Rental  Company  received  the  cancellation  of 
its  license  on  November  14th  from  the  Motion 
Picture  Patents  Company,  which  wus  loft  at 
our  office  on  Tuesday  evening  by  a  mes¬ 
senger.  If  I  am  informed  correctly,  the  man¬ 
ufacturers  had  a  meeting  on  Tuesday,  No¬ 
vember  14th,  and  I  suppose  that  at  that 
.  mooting  it  was  decided  that  my  license 
should  bo  cancelled.” 

Mr.  Kennedy  said: 

“You  are  absolutely  right  about  that.  We 
did  have  a  meeting  on  Tuesday,  November 
14th,  and  at  that  meeting  it  was  decided  that 
your  license  should  bo  cancelled.” 

“Of  course,  Mr.  Kennedy,  I  am  not  sur¬ 
prised  at  this,  because  I  have  really  been  ex¬ 
pecting  this  over  since  I  had  my  talk  with 
you  at  200  Fifth  Avenue  some  time  ago.” 


He  said: 


ubouHt’..i  ‘W  yOU  t0  feGl  that  way 
about  it  ut  all.  1  don’t  want  you  to  think  that 
talk  had  anything  to  do  witlftho  eance.latio^ 
ot  this  license.  In  tact,  to  show  you  that  I 
, “”*"7  ,to  b,u  h'lu»dly  and  that  I  don’t 

mint  to  light  and  scrap,  I  will  be  glad  to  open 
our  negotiations  of  before  and  see  whether 
l  ean  find  some  way  of  settling  this  up  in  a 
nice,  poacehil  manner.’ * 


Mr.  Kennedy,  I  am  glad  to  hoar  you  talk 
that  way.  Having  m  mind  that  my  license 
lias  been  cancelled  and  after  that  goes  into 
e licet  I  have  nothing  to  sell,  I  suppose  I  am 
obliged  to  take  almost  anything  that  you 
want  to  give  mo.” 


“No,  I  want  you  to  put  your  price  upon  it. 
I  made  you  our  oiler  and  you  turned  it  down. 
I  want  you  to  put  your  price  upon  it,  and  if  I 


‘  ‘  Mr.  Kennedy,  if  you  fool  that  way  about  it, 
I  asked  $1150,000  the  last  time  I  was  at  your 
office,  having  in  mind  that  my  license  might 
be  cancelled.  Now  that  it  has  boon  cancelled 
I  will  take  $125,000.  That  is  about  $25,000 
more  than  was  offered  to  me  at  the  time  I 
was  down  to  see  you,  and  surely  $25,000  is 
not  so  much  to  a  great  big  company  like 


7G 


2*6  (Affidavit  of  William  Fox.) 

Ho  said : 

“If  you  are  not  ready  to  accept  the  price 
that  I  originally  offered  you,  and  I  don’t 
remember  exactly  what  that  was,  and  if  you 
think  yon  ought  to  got  $125,000,  why  then 
leave  the  matter  with  me  and  I  will  ho  glad 
to  take  it  up  with  our  Executive  Committee 
and  see  ,pist  wlint  I  can  do  for  you.  You  can 
expect;  to  hear  from  mo  by  next  Tuesday.” 

The  interview  then  terminated. 

22 7  1 made  nn  effort  to  get  in  touch  with  Mr.  Ken¬ 

nedy  by  telephone  on  Tuesday,  November  21st, 

.  and  on  every  day  of  that  week,  and  was  alwavs 
told  at  his  office  that  ho  was  not  in  and  they  did 
not  know  when  to  expect  him.  I  left  my  tele¬ 
phone  number  and  asked  him  to  ho  good  enough 
to  call  mo  up,  which  ho  did  not  do.  I  finally  did 
roach  Mr.  Kennedy  about  Monday,  November 
27lh,  and  ho  told  mo  that  ho  had  been  unsuccess¬ 
ful  in  calling  a  mooting  of  the  Executive  Com¬ 
mittee  and  would  make  every  effort  to  do  so  in  a 
day  or  so  and  would  let  mo  hoar  from  him.  Not 
hearing  from  him  on  Tuesday,  November  28th,  I 
22°  asked  Mr.  Rosonbluh  of  our  ofiico  to  call  on  one 
of  the  Executive  Committee,  a  Mr.  .T.  A.  Berst, 
who  was  also  an  officer  of  the  Patlio  Froros  Com¬ 
pany,  and  asked  him  to  arrange  a  meeting  be¬ 
tween  Mr.  Berst  and  myself.  On  Tuesday  after¬ 
noon,  at  3  o’clock  I  called  on  Mr.  Berst  and  told 
him  of  the  fact  that  I  had  been  to  see  Mr.  Ken¬ 
nedy  on  November  18th  and  that  T  loft  with  him 
the  price  of  $125,000,  and  Mr.  Berst  said: 

“Of  course  there  is  whore  you  have  made 
a  mistake.  You  know  if  you  had  taken  the 
price  that  Kennedy  originallv  offered  vou 


or  if  on  your  visit  on  November  18th  vou 
hud  suid  to  Kennedy:  ‘I  will  take  wlint  vnu 
previously  offered  n,L  tl  c  c  0  lo  ,bWn 
ny  mind  that  Mr.  Kennedy  would  have  closed 

but  aslIIon°tlUn  “P  "'ith  you  nnd  then, 
but  as  long  as  you  were  looking  for  more 
mono)  than  our  schedule  culled  for,  why,  of 
course  lie  would  not  ileal  with  you.” 


Mr.  Berst,  I  really  came  hero  to  ask  you 
to  inttieede  lor  me,  to  have  my  license  rein¬ 
stated,  rather  than  to  have  the  General  Film  23° 
Company  buy  me  out,  beeuuso  1  know  of  noth- 
mg  that  I  have  done  that  could  have  offended 
pj,.  1011  * lcture  -Patents  Company,  or  any 
of  their  rules  that  I  have  violated  so  that  they 
would  be  justified  in  cancelling  my  license.” 


ou  don’t  have  to  violate  any  of  the  rules 
ot  the  Motion  Picture  Patents  Company  to 
have  your  license  taken  away.  Your  exchange 
is  in  the  way  ot  the  General  Film  Company.” 


“If  it  was  not  for  your  exchange  wo  could 
charge  almost  any  price  at  all  for  licensed 
motion  pictures  in  Greater  Now  York  and  the 
surrounding  territory;  but  every  time  that 
the  General  Film  Company  makes  an  effort 
to  raise  the  price  of  one  of  its  customers  it 
finds  that  the  customer  has  left  the  General 


( Affidavit  of  William  Fox.) 


Filin  Company  and  has  gone  with  your  con¬ 
cern  to  rent  films.” 


“Mr.  Bersl,  how  can  you  make  a  statement 
of  that  kind?  You  arc  not  the  active  man  at 
the  General  Film  Company’s  office.” 

lie  said : 


^  Well,  I  am  one  of  the  Executive  G'om- 

233  /  mittoe,  and  all  of  these  matters  are  brought 

j  to  my  attention.  You  ought  to  be  happy  that 
/  we  did  not  cancel  your  license  long  before 
I  now,  and  if  it  were  not  for  the  fact  that  we 
I  all  had  a  high  regard  for  you  we  should  have 
I  taken  it  away  a  year  ago.  We  allowed  you 

I  to  reap  the  profits  for  a  whole  year  so  that 

I  when  wo  did  take  your  license  away  or  when 
I  we  did  offer  to  lniy  you  out  you  would  feel 
|  that  you  got  all  there  was  in  it  for  yourself, 

j  I  suppose  yon  know  that  you  are  the  last 

/  j  licensed  film  exchange  in  America  today,  and 
that  111  itself  ought  to  be  enough  compliment 
to  you,  and  really  you  ought  not  to  put  any 
|  obstructions  in  our  way  or  make  it  harder 

234  than  necessary  to  let  our  combination  go  on 
raising  its  prices  to  whatever  it  can  got,  for 
you  can  readily  understand  that  when  wo  con¬ 
trol  the  entire  country  we  are  not  going  to 
stop  and  lot  you  he  our  only  competitor.” 

I  said : 


“Mr.  Borst,  then  I  suppose  it  is  in  vain  for 
me  to  expect  that  you  are  going  to  be  inter¬ 
ested  to  have  my  license  reinstated.” 


79 

(Affidavit  of  William  Fox.) 

He  said: 


lact,  some  of  the  manufacturers  are  criticis- 
mg  us  lor  not  taking  it  sooner.  The  onlv 
thing  that  I  now  can  do  for  you-you  say 
‘“V’?  “T  to™. Mhs  to  got  Mr.  Kennedy 
on  the  telephone  tins  past  week  and  have  boon 
unsuccessful— 1  will  try  to  get  Mr.  Kennedy 
on  the  telephone  some  lime  to-night  and  will 
try  to  intercede  111  your  behalf— that  he  pays 
you  the  sum  of  money  according  to  our 
schedule  that  we  have  paid  to  all  the  other 
him  exchanges  that  we  bought.” 


I  said : 

“When  shall  I  call  hack  to  see  you?” 
Ho  said : 


“(.'01110  in  tomorrow  at  3  o’clock.” 

I  called  on  Mr.  Bersl  on  Wednesday,  November 
29th.  Ho  said: 


“I  am  awfully  sorry  to  report  to  you  that 
I  have  boon  unable  up  to  now  to  locate  Mr. 
Kennedy.  I  cannot  imagine  why  he  does  not, 
come  to  the  telephone  when  I  leave  my  name. 
Ho  must  have  a  reason  for  not  wanting  to 
answer.  Since  you  wore  in  to  see  me  last 
night  I  could  not  close  mv  eves  when  I  lay  in 
bed.  I  saw  your  vision 'standing  before  1110 
all  of  the  time,  and  I  feel  that  a  great  injus¬ 
tice  has  been  done  to  you  in  not  giving  you 
the  same  sum  of  money  that  has  been  given 
to  the  other  film  exchanges  that  wo  bought. 
Of  course  I  am  in  hopes  that  I  will  bo  able  to 
arrange  it  for  yon — to  get  vou  the  money  that 
I  fool  you  ought  to  get.  If  you  will  go  out- 


80 

23g  ( Affidavit  of  William  Fox.) 

side  and  sit  down  for  a  few  minutes  I  will 
ring  up  the  three  places  where  I  am  apt  to 
iind  Mr.  Kennedy  and  see  whether  I  can  talk 
•with  him.” 

I  then  sat  outside.  Later  Mr.  Worst  opened  his 
door  and  called  me  back  into  his  private  office  and 
informed  mo  that  he  was  unable  to  got  Mr.  Ken¬ 
nedy  on  the  telephone,  gave  mo  his  card  with  his 
home  address  on  and  said  that  I  should  telephone 
him  later  in  the  evening,  and  ho  would  make  every 
effort  in  the  meantime  to  got  in  touch  with  Mr. 

239  Kennedy.  Later  in  the  evening  I  did  ’phono  to 
Mr.  Berst  and  lie  informed  mo  that  ho  had  talked 
with  Mr.  Kennedy  and  that  I  should  ring  up  Mr. 
Kennedy.  I  did  got  Mr.  Kennedy  on  the  tele¬ 
phone  that  evening  and  he  asked  me  to  call  and 
see  him  on  Friday  afternoon,  December  1st.  I 
called  on  Mr.  Kennedy  on  Friday  afternoon,  De¬ 
cember  1st.  He  said: 

“Well,  Fox,  what  can  I  do  for  you  now?” 


240  ‘‘Mr.  Kennedy,  I  have  been  anxiously  wait¬ 

ing  to  hear  from  vou  on  mv  proposition  of 
$125,000.” 

He  said : 

“Of  course  you  know  that  it  is  out  of  the 
question  now.” 

“I  don’t  see  why  that  is  out  of  the  question. 
I  talked  to  Mr.  Berst  day.  before  yesterday, 
and  he  seems  to  think  that  a  grave  injustice 


81 

(Affidavit  of  I Villkm  Fox.)  24I 

ommend*  n°‘i°  ‘7,"°’  'f,ul  would  roc- 

for my  plant-*  UteBli  ^  bo  "» 

Ho  said : 

JZ?Vl0n’i  bclio?  tlmt  *>How  ^ 

ehedu  e,  and  if  yo  11  t  a  moment  I 
7 II  pet  my  schedules  out  ami  Seo  wlmt  your' 
plant  hgures  to.”  •  242 

Ho  then  took  from  his  safe  and  pocket  certain 
schedules,  and  lie  explained  to  me  that  his  idea 
was  that  in  case  they  fell  into  the  hands  of  any¬ 
one  else  no  one  else  could  figure  out  the  basis  on 
which  they  made  out  the  prices  for  tlvoir  plants, 
without  having  them  both,  and  for  that  reason 
ho  kept  half  in  his  pocket  and  half  in  the  safe. 

After  going  through  a  lot  of  litres  ho  told  mo 
that  the  price  the  schedule  showed  was  $78,000. 

1  reminded  him  of  the  fact  that  lie  told  mo  at  his 
office  that  I10  was  willing  to  pay  $8.0,000,  and  that 
Mr.  AVators  said  he  thought  ho  could  get  mo  an  •  243 
even  $100,000. 


He  said : 


AVators  was  not  authorized  to  make  any 
such  statement.  I  have  a  faint  recollection 
that  I  said  something  like  $88,000  or  $89,000, 
hut  to  show  you  that  I  will  help  the  thing 
along,  why  I  will  recommend  that  wo  pay 
you  $90,000.” 


244  {Affidavit  of  William  Fox.) 

I  said: 

“Mr.  Kennedy,  you  claim  you  are  my 
friend  and  Mr.  Borst  says  lie  is  my  friend, 
and  your  Executive  Committee  is  made  up  of 
three  people,  and  1  suppose  a  majority  vote 
rules.  Now,  if  you  are  in  favor  of  giving  me 
$100,000,  I  am  sure  Borst  is.  Your  third 
member  of  the  committee,  who  is  Mr.  Albert 
Smith  of  the  Vitagraph  Company  of  America 
—I  feel  that  ho  would  ho  inclined  to  pay  mo  a 
liberal  price.” 

245  Ho  said : 

“Well,  I  will  ring  up  Borst  and  see  what 
he  has  got  to  say  to  $100,000.” 

He  then  asked  his  operator  to  got  Mr.  Borst  on 
the  wire,  and  held  the  following  conversation  with 
Mr.  Borst: 

“I  have  Fox  in  my  office  and  he  wants 
$100,000  for  his  plant.” 

He  then  hung  up  his  telephone  and  said : 

246' 

“I  am  awfully  sorry  that  I  did  not  connect 
you  on  the  wire  so  that  you  could  hear  what 
Borst  said;  but  Borst  reminded  me  that  the 
schedule  figures  only  $78,000  and  said  that  in 
his  conversation  with  you  the  other  day  lie 
said  that  he  was  only  in  favor  of  paying  you 
the  exact  amount  the  schedule  calls  for.  Of 
course  there  is  no  use  ringing  up  Smith  on 
this  matter,  because  I  know  Smith  is  your 
friend  and  Smith  would  bo  willing  to  give  you 
$150,000  if  it  was  left  to  him.  In  view  of 
Borst ’s  stand  in  the  matter,  the  best  I  would 
recommend  to  the  Committee  would  be  $90,- 


( Affidavit  of  William  Fox.) 

000,  and  would  depend  upon  Smith’s  support 
to  get  you  the  $90,000.” 

I  said : 


“I  am  awfully  sorry,  Mr.  Keunedv.  T 

ooo”  lkR  0  mv<! ■vo"  ilt  luas,; ^0l)r 

Ho  said : 


“box,  for  a  lellow  that  has  got  nothing  to 
sell,  you  have  got  more  nerve  than  any  other  248 
man  .1.  over  ran  into.  Have  you  got  in  mind 
that  tomorrow  night  the  last  film  will  b? 
shipped  to  you  and  that  you  will  he  down  and 
out  of  the  business,  and  that  In  view  of  this 
fact  we  are  still  friendly  enough  with  you  to 
give  you  this  money?” 

I  said : 


“Mr.  Kennedy,  of  course  that  is  all  very 
nice  of  you,  and  I  appreciate  it  very  much, 
but  if  you  say  that  is  the  host  you  will  do, 

I  suppose  there  will  ho  no  need  of  my  arguing 
further  on  the  subject.  Of  course  you  have  2 . 
in  mind  that  tomorrow  night,  as  you  said, 
there  will  bo  no  more  films  shipped  to  mo. 

I  supply  so  many  theatres  who  depend  upon 
brand  new  film,  what;  do  you  recommend  so 
that  I  can  got  film  next  week?” 

He  said : 


“Wait  a  minute.  T  forgot  all  about  that. 
In  the  first  place,  young  man,  I  can’t,  treat 
with  you  at  all  until  you  get  a  license.  I  can’t 
buy  your  exchange  if  you  haven’t  got  a 
license.” 


(Affidavit  of  William  Fox.) 


u  going  to  arrange  tlmt?” 


“  I  will  ring  up  Marvin,  Vice-President  of 
the  Patents  Company  and  sue  it'  I  can’t  show 
him  a  way  to  recall  the  cancellation  of  your 
license.  ’  ’ 


your  business  can  go  on  the  same  as  ever 
until  we  take  possession — the  contract  will 
provide  tlmt  wo  take  possession  as  of  Decem¬ 
ber  Hth  at  8  A.  M.” 

Ho  then  bad  his  operator  got  Mr.  Marvin  on 
the  telephone  and  said : 

“lam  negotiating  for  the  purchase  for  the 
General  Film  Company  of  the  plant  of  the 
Greater  Now  York  Film  Rental  Company.  I 
would  like  to  have  you  recall  the  cancellation 
of  their  license  that  yon  sent  the  Greater 
New  York  Company  on  November  14th.  Now, 
I  don’t  want  you  to  do  in  this  case  as  von 
have  done  in  the  People’s  Film  Company 
case.  _  There,  instead  of  recalling  the  can¬ 
cellation  you  simply  extended  the  license  for 
another  week  and  when  our  negotiations  were 
not  closed  in  that  week  you  had  to  give  au¬ 


nt  you  to  send  a  notice  recalling 
cancellation  of  the  Greater  New  York 
mse,  so  that  they  have  it  in  their  possos- 
n  tomorrow,  so  that  I  can  send  them  their 
'tracts  for  the  purchase  of  their  plant  on 


85 


(Affidavit  of  William  Fox.) 

^m,in,  to  send  the  letter  re- 
on!  mg  the  license,  you  will  need  the  votes 

o!  the  various  manufacturers.  You  have  mv 
\oto  tor  the  General  Film  Company  Yoii 
have  your  vote  for  the  Patents  Company  " 
Mr  ,ul(;i;ll0,lu  openitortlmi 

" ,lh  t'Hofe,  and  you  have  his  vote 
oi  the  Itdison  Company.  Now  ring  up  a  few 
o*  the  other  manuincturors  until  you  get  the 
i!8  and  tolt  them 

in  l  1  said  it  was  all  right  lo  recall  this  can¬ 
cellation,  as  we  have  practically  closed  for 
the  jmrclmse  ot  that  plant.” 


I  have  now  stilted,  substantially,  the  most  im¬ 
portant  part  of  the  conversation  which  lnstod 
about  two  hours.  In  the  course  of  it  Mr.  Kennedy 
repeatedly  said  that  iny  company  was  in  the  way 
of  the  General  Film  Company  and  that  it  was  a 
groat  trust  which  could  not  allow  itself  to  bo  ob¬ 
structed  by  mo;  and  a  great  deal  more  to  similar 
effect,  which  I  lmve  not  taken  time  to  set  forth 
in  detail.  I  then  left,  and  on  the  morning  of 
December  2nd  tile  plaintiff  received  the  notice 
dated  December  1st,  recalling  the  cancellation  of 
license,  which  is  set  forth  in  tho  complaint. 

Mr.  Kennedy  afterwards  sent  me  a  bill  of  sale 
to  be  executed  by  the  plaintiff  to  the  General 
Film  Company  and  a  contract  between  that  com¬ 
pany  and  my  company,  providing  for  the  trans¬ 
fer  of  tho  business,  including  good  will  and  lease 
of  the  premises  occupied  by  my  company.  Ho 
had  said  on  December  1st  that  he  would  send  me 
those  papers  to  be  examined  by  my  counsel. 

On  December  7th  Gustavus  A.  Rogers,  the 
plaintiff’s  counsel,  in  my  presence  and  hearing 
telephoned  Mr.  Kennedy  to  the  effect  that  my 
company  would  not  sell,  and  on  the  next  day  (De- 


r 


(Affidavit  of  William  Fox.) 


comber  8th)  we  received  the  notice  of  cancella¬ 
tion  to  become  effective  on  December  25th,  which 
is  sot  forth  in  the  complaint. 

On  November  21,  1911,  my  company  received 
from  Patho  Frcrcs  a  letter  of  which  the  follow¬ 
ing  is  a  copy: 

‘ 1  Pati ee  Fni5n.Es  Motion  Piotuiiks 
41  West  25th  Street 

New  York,  Nov.  20th,  1911. 

G  .  N.  Y.  Film  Co., 

New  York  City. 

Gentlemen: 

We  have  been  advised  by  the  Motion  Pic¬ 
ture  Patents  Company  that  your  License 
Agreement  with  the  said  concern  will  ter¬ 
minate  on  Monday,  Dec.  4th. 

We  have  therefore  been  instructed  to  dis¬ 
continue  delivery  of  films  to  you  on  or  after 
the  above  date. 

Wo  regret  very  much  that,  wo  have  to  dis¬ 
continue  business  relations  with  you  in  this 

Wishing  you  the  best  success  and  thanking 
you  for  past  favors,  we  bog  to  remain, 
Yours  very  truly, 

Paths  Fheiies, 

Per  M.  Ramirez  Tones.” 

For  the  reasons  set  forth  in  the  complaint  it 
will  bo  impossible  for  the  plaintiff  to  carry  on 
its  business  if  its  license  should  be  cancelled  or 
the  supply  of  films  cut  off  by  the  licensed  manu¬ 
facturers  or  the  regularity  and  promptness  of 
the  service  in  any  wise  interfered  with. 

The  principal  customers  of  the  plaintiff  are 
ten  of  the  largest,  best  equipped  and  best  pat¬ 
ronized  theatres  in  the  Boroughs  r.f  Manhattan 


87 

(Affidavit  of  William  Fox.) 

and  Brooklyn,  City  of  New  York,  devoted  to  the 
exhibition  of  motion  pictures.  I  am  familiar  with 
the  management  and  conduct  of  these  theatres 
and  interested  in  them,  and  have  had  frequent 
opportunity  of  observing  the  character  of  the  pic¬ 
tures  displayed  thereat.  Since  the  formation  of 
the  Motion  Picture  Patents  Company  and  the  ex¬ 
ecution  ot  the  exchange  license  agreement,  Ex¬ 
hibit  A,  .every  and  all  of  the  theatres  aforesaid 


manufacturers  exclusively.  Some  of  the  theatres 
have  come  into  existence  since  that  time,  but  im-  260 
mediately  upon  the  opening  of  the  theatre  and  to 
the  date  hereof  no  other  pictures  have  boon  shown 
therein  excepting  those  of  the  licensed  manufact¬ 
urers;  and  the  effect  of  disconli  lining  the  use  of 
the  licensed  film  in  any  of  the  houses  and  par¬ 
ticularly  in  the  now  theatres  would  bo  not  only  to 
destroy  thy. effect  of  months  of  advertising  in  the 
new  theatres  and  several  years  of  advertising  in 
the  older  theatres,  but  the  result  would  be  ruinous 
to  the  theatres.  r~am  the  nmnaging  olIimr_ȣ  \  ^ 

every  and  all  of  the  theatres  and  entirely  familiar  V""" 
witlf  the  perftjrmandcsj'Miil  upon  my  own  knowl- 
odge-oftliF'nioatroi'Ti'nd  the  conditions  thereat, 

I  state  that  if  the  licensed  manufacturers  refuse 
to  or  cannot  bo  compelled  to  or  will  not  bo  com¬ 
pelled  to  deliver  the  licensed  film  to  the  plaintiff 
so  that  the  theatres  aforesaid  may  lease  the  li¬ 
censed  film,  that  it  will  he  absolutely  necessary 
for  all  of  these  theatres  to  cease  their  business 
relations  with  the  plaintiff  and  to  get  the  licensed 
film  from  the  defendant  jJenqral  Film  Company; 
so  that  the  situation  will  he  that-thejfiaintiff  will 
lose  the  best  and  most  profitable  patrons  that  it 


( Affidavit  of  William  Fox.) 

its  customers  to  the  General  Film  Company  and 
it  would  be  impossible  to  get  them  back. 

The  film  produced  by  the  independent  manu¬ 
facturers  referred  to  in  the  complaint,  is  for  the 
reasons  there  staled  not  capable  at  this  time  of 
substitution  for  the  licensed  ‘ilm.  It  lias  not  the 
same  runge  of  subjects  and  is  not  produced  in 
us  large  quantities  as  the  licensed  film,  and  it  is 
impossible  for  any  ugonoy  or  exhibitor  using  li¬ 
censed  film  to  use  in  connection  therewith  any 
unlicensed  film.  That  would  be  a  violation  of  the 
license  agreement,  and  the  use  of  such  independ¬ 
ent  film  would  also  make  the  plaintiff  and  its  eus-  ' 
toiners  liable  to  suit  by  the  Patents  Company  for 
infringement  of.  patents.  The  Patents  Company 
lias  brought  a  number  of  such  suits  against  ex¬ 
hibitors.  There  have  been  instances  where  li¬ 
censed  limnutucturors  having  discovered  unli¬ 
censed  film  in  a  motion  picture  theatre,  have 
promptly  replevied  the  licensed  film  and  there¬ 
upon  the  Patents  Company  lias  cancelled  the  li¬ 
cense  of  the  exhibitor. 

The  value  of  the  plaintiff’s  business  and  good 
will,  so  long  as  its  license  continues  in  existence, 
is  from  $600,000  to  $750,000,  and  the  plaintiff 
from  October  1,  1010  to  October  1,  1911  earned  in 
its  business  between  $60,000  and  $75,000.  If 
ito  license  should  bo  cancelled,  its  business  and 
good  will  would  be  destroyed  and  become  worth¬ 
less  and  it  could  not  sell  its  plant  for  more  than 
the  value  of  the  fixtures. 

Referring  ;.to  the  accompanying  affidavit  of 
William  H.  Swanson,  I  was  present  at  the  meet¬ 
ing  of  representatives  of  the  rental  exchanges  in 
January,  1909  when  the  license  agreement,  like 
Exhibit  A,  was  brought  to  our  attention,  and  we 


90 

268  (Affidavit  of  William  Fox.) 

were  informed  that  we  must  accept  it  and  do  busi¬ 
ness  according  to  its  conditions.  As  stated  in  Mr. 
Swanson’s  affidavit,  a  committee  of  representa¬ 
tives  of  the  rental  agencies  was  appointed  to  con¬ 
fer  with  the  representatives  of  the  Patents  Com¬ 
pany  and  the  licensed  manufacturers,  and  that 
/  committee,  of  which  Mr.  Swanson  was  chairman, 
reported  back  to  us  that  no  change  in  the  agree¬ 
ment  could  be  obtained,  but  that  the  Patents  Com¬ 
pany  and  the  licensed  manufacturers  informed 
our  committee  that  the  license  was  good  for  the 
unoxpired  term  of  the  patent  under  which  we  were 
to  he  licensed,  that  is  reissue  letters  patent  12192, 
and  that  no  license  could  be  cancelled  except  for 
violation  of  its  conditions  and  after  a  full  hearing. 

On  or  about  January  20,  1909,  which  is  the  date 
of  the  plaintiff’s  license,  I  had  a  conversation  with 
Dwight  Macdonald  who  was  General  Manager  of 
the  Patents  Company,  upon  this  subject.  I  tele¬ 
phoned  him  and  said  that  I  had  the  contract  on 
my  desk  but  had  not  signed  it  and  wanted  to  bo 
sure  of  where  my  company  would  stand  and  how 
long  the  contract  was  good  for.  lie  said,  in  sub- 
2  yQ  stance,  that  I  had  overheard  the  discussion  at  the 
meeting  and  heard  Swanson ’s  report  that  the  li¬ 
cense  was  good  for  the  unoxpired  term  of  the 
patent,  and  that  I  might  be  perfectly  sure  I  would 
not  lose  the  license  so  long  as  the  patent  was  in 
force  unless  I  violated  the  terms  of  the  license. 

William  Fox. 

Sworn  to  before  me  this  ) 

16th  day  of  December,  1911.  \ 

Raphael  Bmll, 

Notary  Public  No.  109, 

New  York  County, 


SUPREME  COURT, 


New  Yobic  County. 


Gbeateii  New  York  Fiwi  Ren. 
tal  Company, 

Plaintiff, 

against 

Motion  Picture  Patents  Com¬ 
pany  and  others, 
Defendants. 


State  and  County  ok  New  York,  ss: 

Corns  Roskndluii,  being  duly  sworn,  says: 

I  mn,  and  have  boon  since  its  organization, 
Manager  of  the  plaintiff  in  this  action. 

I  am  familiar  with  the  moving  picture  business 
in  its  various  branches,  and  particularly  with  the 
business  formerly  conducted  by  rental  agencies 
like  the  plaintiff. 

Before  December,  1908,  there  were' 123  rental 
agencies  carrying  on  business  throughout  the 
United  States.  After  the  organization  of  the 
Patents  Company  and  the  combination  effected 
with  the  licensed  manufacturers,  the  number  was 
reduced  to  72  rental  agencies,  which  wore  licens¬ 
ed  by  the  Patents  Company  under  license  agree¬ 
ments  in  all  respects  similar  to  the  one  issued  to 
the  plaintiff,  Exhibit  A  attached  to  the  complaint. 

Nino  of  the  72  licensed  agencies  were  located  in 
the  Borough  of  Manhattan,  City  of  New  York. 
The  only  one  of  the  72  licensed  agencies  now  re- 


74  (Affidavit  of  Louis  Rosenblttli.) 

maining  in  business  is  the  plaintiff  in  this  action, 
I  know  the  fact  from  my  acquaintance  with  the 
trade,  and,  besides  that,  the  information  was 
given  mo  by  P.  L.  Waters,  manager  of  the  Gen¬ 
eral  Film  Company,  in  a  conversation  had  with 
him  at  his  office  about  the  middle  of  November, 
1911. 

That  conversation  was  a  sequel  to  a  conversa¬ 
tion  I  had  with  Mr.  Waters  at  his  office  about 
throe  months  earlier,  when  I  called  upon  him  in 
response  to  a  telephone  invitation  from  him. 

75  Mr.  Waters  talked  with  me  in  a  general  way 
about  the  sale  of  the  business  of  the  plaintiff  to 
the  General  Film  Company.  Ho  said  he  thought 
it  would  bo  advisable  for  the  plaintiff  to  sell,  and 
that  he  did  not  see  how  it  would  be  possible  for 
it  to  continue  in  business  in  competition  with  the 
General  Film  Company.  He  said  that  the 
Greater  New  York  Film  Rental  Company  was 
the  only  licensed  rental  agency  in  the  United 
States,  except  the  General  Film  Company  and 
one  concern  in  the  West.  Ho  instanced  his  own 
experience  as  owner  of  the  P.  L.  Waters  Ex- 

-6  change  in  this  City  with  the  General  Filin  Com¬ 
pany.  1-Ie  sold  that  business  about  July,  1910,  to 
the  General  Film  Company,  and  said  to  me  that 
if  ho  could  be  assured  of  a  license  from  the  Pat¬ 
ents  Company  and  that  it  would  not  be  cancelled, 
he  would  gladly  repay  all  the  money  ho  had  re¬ 
ceived  for  the  sale  of  his  business  and  pay  $100,- 
000  additional  for  the  privilege  of  carrying  on  a 
rental  exchange  in  this  City. 

At  the  second  conversation  with  Mr.  Waters, 
which  was  upon  the  same  general  subject,  he  told 
mo  that  the  western  concern  was  no  longer  a  li¬ 
censed  exchange,  thus  leaving  the  General  Film 


(Affidavit  of  Louis  Rosanbluh.) 

Company  in  solo  possession  of  the  field  in  the 
United  States,  with  the  exception  of  the  plaintiff 
in  this  action. 

On  or  about  November  29,  1911,  1  had  a  con¬ 
versation  with  Mr.  J,  A.  Hurst,  a  director  of  the 
doloudant  Patlie  Freres  and  treasurer  of  the  de¬ 
fendant  General  Film  Company.  I  wont  to  Mr. 
Burst’s  office  for  the  purpose  of  arranging  a 
meeting  between  him  and  Mr.  William  Fox,  Pres¬ 
ident  of  the  plaintiff,  which  I  did  arrange  for  that 
afternoon. 

I  asked  Mr.  Borst  why  the  plaintiff’s  license 
had  been  cancelled,  and  be  said  that  the  Greater 
Now  York  Film  Rental  Company  was  the  only 
licensed  rcntnl  agency  remaining  in  business,  ex¬ 
cept  the  General  Film  Company,  and  it  was  neces¬ 
sary  to  got  our  concern  out  of  the  way.  Ho  said 
that  the  managers  of  the  various  branch  offices 
of  the  General  Film  Company  reported  to  him, 
through  officers  of  the  Company,  when  asked  why 
they  could  not  got  prices  for  film  from  exhibitors, 
that  it  was  impossible  so  long  as  the  Greater  Now 
York  Film  Rental  Company  was  in  the  field,  be¬ 
cause,  whenever  the  General  Film  Company  ex¬ 
pressed  an  intention  to  increase  the  rentals  to 
exhibitors,  the  latter  replied  that  they  would  get 
their  film  from  the  Greater  Now  York  Film 
Rental  Company,  which  had  not  increased  its 
prices,  and  that  some  of  the  customers  of  the 
General  Film  Company  had  already  gone  over  to 
our  concern. 

The  plaintiff  never  solicited  the  patronage  of 
any  customers  of  the  General  Film  Company,  but 
has  lost  customers  to  the  General  Filin  Company, 
which  has  been  actively  soliciting  the  trade,  and 
has  been  cutting  prices  and  renting  films  below 
the  prices  charged  by  the  plaintiff. 


2 So  (Affidavit  of  Louis  Rosenbluh.)  , 

As  much  ns  throe  or  four  weeks  before  Novem¬ 
ber  14,  1911,  the  date  of  the  first  notieo  of  can- 
cellnlion  of  the  plaintiff’s  license,  rumors  wore 
widespread  through  the  trade  in  Now  fork  that 
the  plaintiff  would  soon  lose  its  license  and  ho 
compelled  to  retire  from  business.  Frequent  re¬ 
ports  came  to  mo  from  exhibitors,  who  were 
doing  business  with  the  plaintiff,  that  such  state¬ 
ments  had  been  made  by  a  representative  of  the 
General  Film  Company,  and  many  of  our  custom¬ 
ers  inquired  whether  the  statement  was  true. 

281  Ever  since  the  organization  of  the  plaintiff,  it 
has  had  standing  orders  with  every  one  of  the 
licensed  manufacturers  (so  designated  in  the 
complaint)  for  the  entire  output  of  films  of  each 
of  such  manufacturers,  except  that  occasionally 
such  an  order  would  he  cancelled  when  the  pro¬ 
duct  of  a  particular  manufacturer  for  a  time  fell 
below  the  standard  and  proved  unsatisfactory  to 
exhibitors. 

Since  the  combination  made  in  the  latter  part 
of  1908  or  the  beginning  of  1909,  the  plaintiff  has 
continued  to  keep  standing  orders  with  each  of 
said  licensed  manufacturers  for  the  entire  output 
2®2  of  such  manufacturers,  and  has  paid  the  rental 
fixed  by  the  plaintiff’s  license  agreement,  which 
is  eleven  cents  per  running  foot,  subject  to  a 
rebate  of  10  per  cent,  as  provided  in  said  license. 

During  the  period  of  competition  among  the 
manufacturers  preceding  the  aforesaid  combina¬ 
tion,  greater  enterprise  was  displayed  by  the 
manufacturers  in  obtaining  and  depicting  new 
scones  and  subjects  than  they  have  shown  since 
the  combination;  the  plaintiff  and  other  rental 
agencies  existing  during  the  period  of  competi¬ 
tion  bought  the  films  outright,  paying  therefor 


( Affidavit  of  Louis  Rosenbluh.)  283 

less  than  since  the  combination  has  been  exacting 
for  the  films  in  the  way  of  rental;  the  plaintiff 
ami  other  rental  agencies,  before  the  combination, 
wore  able  to  make  more  extensive  and  profitable 
use  of  the  films,  first,  because  being  the  owners 
thereof  they  could  run  them  indefinitely  in  mov¬ 
ing  picture  shows  so  long  as  exhibitors  could  bo 
found  who  were  willing  to  use  the  films,  and  in¬ 
asmuch  as  new  exhibitors  and  new  show  places 
wore  constantly  springing  into  existence  in  places 
where  moving  pictures  wore  a  novelty,  the  films 
could  bo  kept  in  service  for  as  long  a  period  as  284 
two  years,  and  in  fact  until  they  were  physically 
worn  out  and  useless;  and,  secondly,  the  rental 
agencies  wore  not  confined  to  leasing  films  to  ex¬ 
hibitors  licensed  by  anybody,  and  thus  wore  free 
and  unhampered  in  carrying  011  their  business. 

Since  the  combination,  as  appears  from  the  li¬ 
cense  agreement,  Exhibit  A,  the  period  during 
which  a  rental  agency  can  use  the  films  is  limited, 
and  they  may  bo  leased  only  to  licensed  exhibitors. 

In  addition,  there  is,  and  always  has  boon,  since 
the  combination,  constant  danger  of  cancellation 
of  a  license  owing  to  dishonesty  of  a  licensed  ex¬ 
hibitor  who  may  yield  to  the  temptation  to  pass  2 
films  on  to  some  unlicensed  exhibitor,  and  there 
has  frequently  boon  more  than  a  suspicion  in  the 
trade  that  such  occurrences  have  been  instigated 
by  the  Patents  Company  to  afford  an  excuse  for 
cancelling  licenses.  Owing  to  such  risk  in  putting 
films  into  the  hands  of  licensed  exhibitors,  it  has 
been  necessary  for  the  plaintiff  to  restrict  its  ac¬ 
tivities,  and  it  has  in  fact  reduced  its  business  out¬ 
side  of  the  City  of  New  York  so  that  it  eoukl  keep 
close  watch  of  the  exhibitors  to  whom  it  leased 
films.  It  has  also  been  necessary  for  the  plain- 


96  ••  ' 

2gg  (Affidavit  of  Louis  liosunbhih .) 

(iff  to  go  to  the  expense  of  employing  inspectors 
to  visit  the  shows  given  by  licensed  exhibitors 
dealing  with  the  plaintiff,  to  make  sure  that  there 
was  no  violation  of  the  terms  upon  which  the 
films  were  leased  or  of  the  conditions  of  tiio  plnin- 
tiif’s  licenso. 

Before  .January,  1909,  the  prices  of  Him  sold 
by  the  various  manufacturers  varied,  some  being 
sold  as  low  as  7>/o  cents  per  running  foot.  After 
the  combination,  the  prices  charged  by  all  the  li¬ 
censed  manufacturers  wore  the  same,  and  higher 
2S7  than  the  average  prices  before  prevailing. 

The  plaintiff  has  been  obliged  to  reduce,  und 
has  reduced,  the  territorial  extent  of  its  business 
for  the  reasons  mentioned. 

The  plaintiff  has  a  largo  investment  in  its 
plant  und  business,  and  has  built  up  a  valuuble 
good-will,  which  is  day  by  day  increasing  in 
value,  and  it  has  made  and  is  making  large  profits 
from  its  business.  If  its  license  wore  cancelled, 
and  its  supply  of  films  cut  off,  or  the  promptness 
and  regularity  of  the  supply  in  any  wise  impaired, 
the  plaintiff’s  business  would  be  ruined. 

Its  business  requires  it  to  rocoivo  from  each  of 
288  the  licensed  manufacturers  the  entire  output  of 
such  manufacture  as  fast  as  the  fdms  are  ready 
for  the  market.  The  essence  of'  the  rental  ex¬ 
change  business  lies  in  the  ability  of  the  rental 
agency  to  furnish  new  films,  i.  e.,  films  containing 
new  scenes  and  subjects — to  exhibitors  weekly,  in¬ 
sufficient  quantity  to  give  them  a  variety  of  choice, 
and  for  that  reason  the  plaintiff  has  always  main¬ 
tained  standing  orders  for  the  entire  output  of 
all  said  manufacturers,  and  has  thus  far  been 
served  promptly  and  regularly  and  without  dis¬ 
crimination. 


97 

(Affidavit  of  Louis  Rosenbluh.) 

The  films  are  designated  as  “runs,”  according 
to  the  dates  on  which  they  are  leased  to  exhibit¬ 
ors.  The  plaintiff  usually  bought  from  the  li¬ 
censed  manufacturers  86  reels  of  film  per  week, 
and  has  latterly  bought  from  them  38  reels  per 
week.  Each  retd  contains  a  new  scone  or  subject, 
and  a  release  date  is  designated  for  each  reel  on 
which  dale  it  may  bo  leased  to  exhibitors.  Film 
supplied  on  the  release  date  is  known  as  the  “first 
run”;  that  supplied  on  the  next  day  is  known  us 
the  “second  run,”  and  so  on.  The  plaintiff  has 
customers  who  take  “first  run”  together  with 
subsequent  ‘runs,”  and  other  customers  that 
always  take  later  than  “first  runs.”  Those  that 
make  a  practice  of  showing  “first  run”  film  would 
not  deal  with  the  plaintiff  unless  they  wore 
promptly  supplied  with  the  “first  run,’’ and  if 
such  film  should,  by  means  of  any  delay,  be  sup¬ 
plied  by  the  plaintiff  after  the  release  date,  it 
would  not  bo  serviceable  as  “first  run”  film,  be¬ 
cause  other  exhibitors  obtaining  their  supply 
through  the  General  Film  Company  would  already 
have  shown  the  same  subjects  on  an  earlier  date. 
In  all  large  cities,  and  particularly  in  New  York, 
the  freshness  of  the  supply  of  film  is  of  prime  im¬ 
portance,  and  it  would  be  impossible  for  the  plain¬ 
tiff  to  supply  its  best  customers  if  it  were  not 
regularly  and  promptly  furnished  with  all  the 
new  scenes  and  subjects  put  out  by  the  licensed 
manufacturers. 

Lours  Rosr.xm.un. 
Sworn  to  before  me  this) 

16th  day  of  December,  191J.J 
David  Davis, 

Notary  Public, 

Kings  County,  No.  83. 

Certificate  filed  in  N.  Y.  County. 

Registers  No.  Kings  Co.  4346.  N.  Y.  County 
2181. 


t.  __  .  t  i 


SUPREME  COURT  OP  THE  STATE  OF  NEW 

YORK. 


Cheater  New  York  Film  Rental 
Company, 

Plaintiff, 

against 

Motion  Picture  Patents  Com¬ 
pany  and  OtllOl'S, 

Defendants. 


State  and  County  op  New  York — ss: 

William  II.  Swanson,  being  duly  sworn,  says: 

1.  I  reside  in  C'hicugo,  Cook  County,  Illinois. 
In  the  year  1906  I  formed  the  firm  of  William  H. 
Swanson  &  Company  at  No.  79  Clark  Street, 
Chicago,  Illinois,  I  engaged  in  the  business  of  pur¬ 
chasing  motion  picture  film  and  projecting  nm- 
chinos  and  leased  the  films  and  machines  to  ex¬ 
hibitors  on  a  weekly  rental  basis.  In  1907  I  form¬ 
ed  and  organized  a  corporation  under  the  laws 
of  the  State  of  Illinois,  known  as  the  William  II. 
Swanson  Dixie  Film  Company,  and  established 
a  similar  business  at  New  Orleans,  La.  In  the 
same  year  I  organized  and  incorporated  a  cor¬ 
poration  known  as  the  William  II.  Swanson  St. 
Louis  Film  Company,  doing  a  similar  business  at 
St.  Louis,  Mo.  The  following  year  I  personally 
established  the  William  II.  Swanson  Kansas  City 
Film  Company,  doing  a  similar  business  in 


{Affidavit  of  William  II.  Swanson.) 

Kansas  City,  Mo.  The  same  year  I  per¬ 
sonally  established  the  William  II.  Swanson 
Omaha  Film  Company  at  Omaha,  Nebraska,  doing 
a  similar  business.  I  continued  to  conduct  all  of 
the  foregoing  establishments  until  the  latter  part 
of  1908.  During  all  of  this  time  I  purchased  mo¬ 
tion  picture  films  from  all  of  the  following  con¬ 
cerns:  American  Mutoscope  &  Biograph  Com¬ 
pany,  Edison  Manufacturing  Company,  Essanay 
Company,  Kalem  Company,  George  Kloine,  Lubin 
Manufacturing  Company,  Pathe  Froros,  Selig 
Polyscope  Company,  and  Vitagruph  Company  of 
America,  and  from  several  of  them  I  purchased 
projecting  machines.  The  film  that  I  purchased 
was  mine,  and  I  paid  for  same,  and,  as  I  have 
heretofore  described,  in  turn  I  leased  the  film  to  - 
exhibitors.  Up  to  the  year  1908  I  lmd  established 
a  largo  business,  the  not  profits  of  which  wCre  at 
least  $lQ0^000_a  year.  The  markot-was  open.  I 
was  pernutteiTtd'bujnilm  wherever  I  chose  to  buy 
it.  The  manufacturers  were  competing  with  each 
other  and  selling  goods  only  on  quality,  without 
regard  to  standing  order.  By  that  I  mean  that  I 
was  not  obliged  to  give  any  specified  order — any 
continuous  number  of  regular  releases  which  could 
not  be  discontinued  by  means  of  a  two  weeks 
notice  given  in  advance  of  the  next  coming  release 


Mr 


'/// 

V4y‘" 


(a)  I  will  hereafter  show  that  after  the  forma¬ 
tion  of  the  combination  of  the  manufacturers  and 
the  organization  of  the  Motion  Picture  Patents 
Company  the  course  of  dealings  changed  entirely : 
instead  of  it  being  a  purchase  arrangement,  I  and 
the  other  agencies  wore  only  permitted  to  lease 
film  and  not  to  purchase  and  could  not  purchase 


101 


100 

2g8  (Affidavit  of  William  II.  Swanson.) 

but  wore  obliged  to  take  what  the  manufacturers 
saw  fit  to  give  us,  and  that  the  quality  of  film  was 
to  bo  determined  absolutely  by  the  manufacturers. 

II.  — Prior  to  January,  1009  the  licensed  man¬ 
ufacturers,  to  wit :  American  Mutoscope  nnd  Bio¬ 
graph  Company,  Edison  Manufacturing  Com¬ 
pany  ,  Essanny  Company,  Kaloin  Company, 
George  Kleine,  Lubin  Manufacturing  Company, 
Patlio  Frores,  Solig  Polyscope  Company,  and 
Vitagraph  Company  of  America,  had  combined, 

299  and  the  Motion  Picture  Patents  Company  was 
formed  in  the  latter  part  of  1008  or  in  the  early 
part  of  1009. 

(n)  Thereupon,  at  the  request  of  the  licensed 
manufacturers  a  meeting  of  the  representatives 
of  all  of  the  film  rental  exchanges  in  the  United 
States  was  called  while  in  session  at  the  Imperial 
Hotel,  Borough  of  Manhattan,  City  of  New  York, 
on  or  about  January  12,  1000.  At  this  meeting 
there  were  representatives  of  about,  one  hundred 
film  rental  exchanges.  I  attended  this  meeting 
as  a  representative  of  the  following  concerns  in 

-*00  which  I  was  interested  either  ns  the  sole  owner 
or  as  the  majority  stockholder;  William  II.  Swan¬ 
son  &  Company,  of  Chicago,  Illinois;  William  II. 
Swanson  Dixie  Film  Company;  William  II.  Swan¬ 
son  St.  Louis  Film  Company;  William  II.  Swan¬ 
son  Kansas  City  Film  Company;  and  William  II. 
Swanson  Omaha'  Film  Company. 

III.  — At  that  meeting  the  representatives  of 
the  film  exchanges  wore  informed  by  the  manu¬ 
facturers  that  the  latter  had  formed  the  Motion 
Picture  Patents  Company  and  that  it  had  li- 


(Affidavil  of  William  II.  Swanson.)  30I 

consod  the  manufacture  of  films  and  that  there¬ 
after  the  licensed  manufacturers  would  only  deal 
with  such  of  the  film  exchanges  as  should  bo  li¬ 
censed  by  the  Motion  Picture  Patents  Company; 

(a)  That  no  films  would  be  sold  but  that  films 
would  only  be  leased  to  the  licensed  exchanges 
under  the  terms  of  an  agreement  which  they  had 
prepared  for  signatures  of  such  exchanges  as  they 
hud  determined  to  license.  They  also  stated  that 
they  had  concluded  not  to  license  all  of  the  ex¬ 
isting  ugoncios,  but  that  some  of  the  agencies  302 
would  not  ho  licensed.  The  fact  is  that  a  number 
of  the  exchanges  were  refused  a  license. 

(h)  It  was  also  stated  that  the  licensed  rental 
agencies  would  only  be  supplied  with  leased  films 
as  long  as  they  continued  to  hold  the  license  of 
the  Motion  Picture  Patents  Company,  and  no 
longor,  and  that  the  licensed  rental  exchanges 
would  only  sublease  the  film  to  such  exhibitors 
as  would  bo  licensed  by  the  Motion  Picture  Pat¬ 
ents  Company  and  none  others,  nnd  that  for  each 
projecting  machine  upon  which  the  film  was 
shown  a  license  fee  of  two  dollars  per  week  must  3°3 
he  paid  to  the  Motion  Picture  Patents  Company. 

(0)  It  was  also  stated  that  no  licensed  film 
rental  agency  should  purchase,  lease  or  deal  in 
any  other  film  excepting  the  film  leased  from  the 
licensed  manufacturers,  and  that  no  licensed  ex¬ 
hibitor  would  be  permitted  to  show  or  exhibit  any 
film  excepting  the  leased  films  of  the  licensed 
manufacturers,  and  that  the  agencies  must  return  ■ 
within  a  specified  time  the  film  which  they  had 
purchased  and  take  in  exchange  leased  film  for 


102  ' 


io:s 


304  (Affidavit  of  William  II.  Swanson.) 

which  they  wore  to  pay  the  leased  price.  Before 
the  close  of  the  mooting  there  was  road  to  tire 
representatives  of  tire  iilm  rental  exchanges  a 
printed  form  of  exchange  license  agreement  sim¬ 
ilar  in  form  to  the  exchange  license  agreement 
between  the  Motion  Picture  Patents  Company  and 
the  Greater  Now  York  Film  Bontal  Company,  an¬ 
nexed  to  the  complaint  in  this  action,  marked 
Exhibit  A. 

IV.— After  the  announcement  was  made,  and 

305  the  reading  of  the  agreement  referred  to  in  the 
preceding  paragraph,  the  representatives  of  the 
manufacturers  stated  that  that  was  the  only  form 
of  agreement  that  would  bo  accepted  by  the  Mo¬ 
tion  Picture  Patents  Company,  without  modifi¬ 
cation,  and  that  any  film  rental  exchange  that 
refused  to  sign  the  agreement  would  not  be  sup¬ 
plied  with  film.  Printed  copies  of  the  agreement 
wore  circulated  among  the  representatives  at  the 
meeting,  and  they  were  informed  that  the  Com¬ 
mittee  of  the  manufacturers  was  waiting  in  an 
adjoining  room  to  get  the  sense  of  the  mooting. 
All  of  the  representatives  of  the  film  rental  ox- 

306  changes  protested  against  signing  the  agreement 
and  to  the  request  for  a  compliance  on  their  part 
with  the  conditions  contained  in  it. 

(a)  As  the  result  of  the  unanimous  protest  of 
the  representatives  of  the  film  rental  exchanges 
a  committee  was  appointed  of  which  I  was  the 
chairman.  This  committee  waited  on  the  commit¬ 
tee  of  the  Motion  Picture  Patents  Company  and 
the  licensed  manufacturers  consisting  of  Frank  h. 
Dyer  of  the  Edison  Company,  H.  N.  Marvin  of  the 
American  Mutoscope  &  Biograph  Company  and 


(Affidavit  of  William  II.  Swanson.)  307 

Mr.  George  T.  Scull,  at  No.  10  Fifth  Avenue,  Bor¬ 
ough  of  Manhattan,  Now  York  City,  which  was  at 
the  time  the  headquarters  of  the  Motion  Picture 
Patents  Company  and  which  at  that  time  was  the 
headquaiteis  of  the  Edison  Manufacturing  Com¬ 
pany  the  aforesaid  three  having  been  repre¬ 
sented  as  being  the  Executive  Committee  of  the 
Motion  Picture  Patents  Company.  I  stated,  as 
the  chairman  of  our  committee,  that  the  meeting 
of  the  representatives  of  the  film  rental  exchanges 
had  takun  an  adjournment  and  had  postponed' 
action,  because  there  was  a  unanimity  against  3°8 
signing  the  agreement,  and  that  on  behalf  of  the 
representatives  oi  the  film  rental  exchanges  our 
oommitteo  was  directed  to  say  to  the  Motion  Pic¬ 
ture  Patents  Company  and  licensed  manufac¬ 
turers,  that  the  agreement  was  harsh  and  arbi¬ 
trary  and  should  not  be  exacted.  Mr.  Dvor  said 
that  if  the  rental  exchanges  did  not  want  to  sign 
the  agreement  they  did  not  have  to.  I  thereupon 
asked  Mr.  Dyer  whether  if  we  did  not  sign  it  the 
licensed  manufacturers  would  supply  us  with 
film.  Ho  said  they  certainly  would  liot,  that  he 
had  already  stated  to  us,  and  repeated,  that  no  309 
one  could  buy  any  film  at  all,  and  that  the  li¬ 
censed  manufacturers  would  not  lease  the  film  ex¬ 
cepting  to  such  exchanges  as  were  licensed  and 
had  signed  the  agreement.  I  then  stated  that  if 
wo  did  not  sign  the  agreement  and  get  a  license 
and  they  would  not  lease  films  to  us,  that  the  ex¬ 
changes  would  have  to  go  out  of  business.  Mr.^*^^" 
Dyer  said  that  was  up  to  us.  I  then  usked  him 
how  long  wo  wore  to  bo  bound  by  this  agreement — 
how  long  this  agreement  was  to  bo  for;  that  they 
did  not  mention  any  specific  time  in  the  agree- 


3io 


(Affidavit  of  William  II.  Swanson.) 


raent,  nnd  still  tliey  said  in  it  that  they  could  can¬ 
cel  it  at  any  time  with  or  without  cause.  Mr.  Dyer 
said  that  the  license  agreement  was  for  the  life 
of  the  patent  and  that  unless  it  was  cancelled  in 
the  manner  provided  in  the  agreement  it  would 
continue  through  the  life  of  the  patent.  I  then 
asked  him  how  the  agreement  was  going  to  con¬ 
tinue  through  the  life  of  the  patent  when  they  did 
not  say  in  the  agreement  that  it  might  bo  cancelled 
only  “for  cause,”  and  requested  him  to  insert  a 
provision  in  the  agreement  that  it  could  he  can- 
3 1 1  celled  only  for  cause.  He  said  that  we  could  rest 
assured  that  no  man’s  license  would  he  taken  from 
him  unless  it  was  for  cause  and  that  if  he  lived  up 
to  the  terms  of  the  agreement  it  would  continue 
throughout  the  life  of  the  patent,  nnd  that  if  there 
were  any  violations  of  the  agreement  assorted 
that  the  man  would  have  a  fair  and  full  opportun¬ 
ity  of  making  explanations  before  his  license  was 
taken  away.  I  thereupon  became  insistent  that 
there  were  other  things  in  the  agreement  that  re¬ 
quired  change,  and  Mr.  Dyer  became  impatient 
and  said  that  the  agreement  had  been  prepared 
in  that  form  for  signature  by  everybody  and  not 
3  a  word  in  it  would  he  changed  and  it  must  be 
taken  in  that  way  or  not  at  all. 


V. — The  committee  made  a  report  to  the  meet¬ 
ing  of  the  representatives  of  the  film  exchanges, 
and  discussion  was  had  as  to  a  way  or  moans  of 
obtaining  film  other  than  through  the  licensed 
manufacturers,  and  it  was  the  unanimous  sense 
of  the  meeting,  after  a  full  discussion,  that  there 
was  no  way  in  existence  or  that  could  he  devised, 
of  getting  American  film,  excepting  through  the 


105 

(Affidavit  of  William  II.  Swanson.)  3I3 

licensed  manufacturers,  and  that  the  only  foreign 
film  that  was  commercially  of  use  was  that  of  the 
Patho  Frorcs  Company  which  had  also  joined  the 
licensed  manufacturers. 

(a)  "With  respect  to  the  fact  of  obtaining  film 
I  state  that  at  the  time  of  the  formation  of  the 
combination  there  were  absolutely  no  manufac¬ 
turers  in  the  United  States  or  Canada  manufac¬ 
turing  film,  and  that  there  was  no  source  of  sup¬ 
ply  in  America  except  through  the  licensed  manu¬ 
facturers;  that  all  the  foreign  film  manufacturers  3*4  ■ 
whoso  product  was  obtainable  and  had  com¬ 
mercial  value  for  us,  were  controlled  by  Pathe 
Frorcs  a  manufacturer  which  lmd  joined  the 
ranks  of  the  licensed  manufacturers  and  was  one 

of  them,  and  a  few  concurns  the  output  of  which 
was  controlled  by  George  Klcinc,  referred  to  in 
the  license  agreement  as  a  licensed  manufacturer, 
nnd  who  had  joined  the  ranks  of  the  licensed 
manufacturers,  and  ulso  the  supply  of  George 
Molios  who  had  joined  the  ranks  of  the  licensed 
manufacturers. 

(b)  The  fact  is  that  the  demand  since  1909  has  3  5 
been  for  the  film  of  American  manufacture  to 

the  practical  exclusion  of  the  foreign  made  film, 
and  that  the  ratio  is  about  seven  American  films 
to  one  foreign  film. 

VI. — The  representatives  of  the  film  exchanges, 
confronted  with  this  situation  and  considering 
Hint  the}'  wore  forced  to  sign  the  agreement  or 
abandon  their  business,  with  the  exception  of  the 
representatives  of  two  concerns,  expressed  a  will- 


106 


Jl6  ( Affidavit  of  William  II.  Swanson.) 

ingnoss  to  accept  the  agreement,  and  I  am  in¬ 
formed,  that  with  the  exception  of  those  two  con¬ 
cerns,  that  all  of  the  agencies  tlmt  the  Motion 
Picture  Patents  Company  was  willing  to  license, 
thereafter  executed  the  agreement— the  total 
number  of  which  I  am  informed  and  believe,  is 
approximately  seventy-five — and  as  to  those  two 
concerns,  to  wit:  Chicago  Film  Exchange,  of 
Chicago,  Ill.,  and  the  Globe  Film  Exchange,  of 
Chicago,  Ill.,  both  of  which  had  a  number  of 
branches  throughout  the  United  States,  they  were 

3 1 7  practically  driven  out  of  business  and  wore  com¬ 
pelled  to  abandon  their  branches  and  the  busi¬ 
ness  of  the  main  offices  dwindled  to  almost  noth¬ 
ing. 

VII— It  was  stated  by  Mr.  Dwight  Macdonald, 
that  lie  was  acting  as  the  general  manager  for  the 
Motion  Picture  Patents  Company,  and  that  state¬ 
ment  was  likewise  made  by  the  representatives 
of  the  Motion  Picture  Patents  Company  and  the 
licensed  manufacturers,  and  the  representatives 
of  the  various  exchanges  were  directed  tlint  all 
future  dealings  beginning  with  the  signing  of  the 

3 1 8  agreements  and  thereafter,  should  be  had  with 
Mr  Macdonald.  The  fact  is  that  Mr.  Macdonald 
was  the  general  manager  of  the  Motion  Picture 
Patents  Company,  and  I  have  seen  a  number  of 
agreements  that  have  been  executor  by  Mr.  Mac¬ 
donald  as  the  general  manager  of  the  Motion 
Picture  Patents  Cmpany.  After  I  had  express¬ 
ed  a  willingness  to  accept  and  execute  exchange 
license  agreements  for  the  various  places  in 
which  I  or  my  companies  were  interested,  ns 
hereinbefore  described  in  paragraph  I,  of  this 
affidavit,  there  was  delivered  to  me  a  form  of 


107 


( Affidavit  of  William  II.  Swanson.) 

license  exchange  agreement  for  each  place  ex¬ 
cepting  the  one  at  Now  Orleans,  La.  I  executed 
the  agreements  and  sent  them  to  the  Motion  Pic¬ 
ture  Patents  Company  by  mail  to  No.  10  Fifth 
Avenue,  Borough  of  Manhattan,  Now  York  City, 
but  they  were  never  returned- to  me  and  I  never 
received  executed  agreements,  Several  com¬ 
munications  I  sent  to  the  Motion  Picture  Patents 
Company  received  scant  attention. 

(a)  I  was  supplied  with  leased  film,  however, 

for  loss  than  two  months,  and  in  February,  1900,  320 

I  was  notified  that  I  would  not  got  any  more  film, 
and  all  of  the  exhibitors  to  whom  I  rented  receiv¬ 
ed  a  notice  from  the  Motion  Picture  Patents 
Company  that  I  was  not  licensed  to  rent  films  and 
that  they  wore  prohibited  from  taking  service 
from  1110  und  that  they  must  take  service  from 
one  of  the  licensed  rental  exchanges. 

(b)  I  have  not  been  supplied  with  any  films 
from  February,  1909,  to  the  date  hereof,  by  any 
of  the  licensed  manufacturers,  and  I  was  unable 
to  get  any  film  elsewhere. 

321 

(e)  After  receiving  the  notice  from  the  Motion 
Picture  Patents  Company,  and  having  been  noti¬ 
fied  by  the  exhibitors  to  whom  I  had  rented  film, 
that  they  were  instructed  by  the  Motion  Picture 
Patents  Company  to  discontinue  renting  from  1110 
I  went  to  Mr.  George  Kloino,  Mr.  William  Selig 
of  the  Selig  Polyscope  Company,  Mr.  George 
Spoor  of  the  Essanay  Company,  Mr.  John  Har¬ 
den,  a  representative  of  the  Edison  Manufacturing 
Company  at  Chicago,  Mr.  John  Bock,  the  Chicago 
representative  of  the  Vitngraph  Company  of 


108 


322  ( Affidavit  of  William  II.  Swanson.) 

America  (who  is  the  son  of  Mr.  William  Rock, 
the  President  of  that  Company),  Mr.  William 
Wright,  the  Chicago  representative  of  the  Kalem 
Company,  and  Mr.  Montague,  the  Chicngo  repre¬ 
sentative  of  the  Pathe  Freres  Company,  all  of 
whom  wore  the  men  that  I  had  previously  dealt 
with  in  the  course  of  my  business  with  the  various 
companies  which  they  represented,  and  I  request¬ 
ed  that  the  orders  that  I  had  for  film  be  filled, 
stating  that  it  was  destructive  to  my  business  if 
they  did  not  fill  the  orders.  I  was  informed  by 

323  each  and  all  of  them  that  they  had  instructions 
from  the  Motion  Picture  Patents  Company  not 
to  ship  me  any  film,  that  under  the  arrangement 
they  were  not  permitted  to  ship  any  film  to  me 
and  that  they  would  not  ship  any. 

(d)  I  tried  to  do  business  with  the  films  that  I 
had  on  hand,  hut  I  was  unable  to  do  so  on  ac¬ 
count  of  the  wide  publicity  which  was  given  by 
the  Motion  Picture  Patents  Company  to  the  fact 
that  I  had  no  license  to  rent  film,  and  further,  it 
was  a  matter  of  common  knowledge  that  where 
films  were  shown  by  exhibitors  that  did  not  come 

324  from  licensed  agencies,  that  the  licensed  manu¬ 
facturers  by  writs  of  replevin  and  other  court 
proceedings  during  the  course  of  the  exhibitor’s 
performance  seized  the  films  that  were  being 
shown,  carried  them  away  and  broke  up  the  per¬ 
formance.  Some  of  the  exhibitors  expressed 
themselves  to  me  to  the  effect  that  if  they  handled 
my  film  they  would  he  subject  to  these  suits  in 
replevin  and  court  proceedings  and  also  damages 
and  they  did  not  want  to  become  involved  and  con¬ 
sequently  went  elsewhere  to  got  their  films.  For 
a  period  of  several  months  my  business  was  at  a 


10!) 

( Affidavit  of  William  II.  Swanson.)  325 

practical  stand-still — so  much  so  that  the  receipts 
of  the  agencies  immediately  dropped  from  a  not 
profit  of  $3,000  a  week  to  a  not  loss,  finally  re¬ 
sulting  in  my  being  compelled  to  discontinue  all 
of  the  agencies.  I  had  a  cash  capital  of  $100,000 
or  more  in  addition  to  the  stock  of  films  I  had  on 
hand  and  the  assets  and  good  will  of  my  business 
which  were  worth  $750,000. 

(0)  So  that  while  at  the  time  when  the  Motion 
Picture  Patents  Company  was  formed  and  the 
combination  was  made  with  the  licensed  manu-  326 
facturers  1  had  a  plant  the  assets  and  good  will 
of  which  were  worth  $750,000  over  the  liabilities, 
before  the  close  of  the  year  1909  my  capital  was 
gone  and  my  places  since  wiped  out  of  existence. 

For  a  period  of  about  throe  years  prior  to  1909 
the  net  profits  annually  of  my  business  averaged 
about  $75,000  a  year.  After  the  refusal  to  ship 
there  wore  no  profits,  and,  in  fact,  in  my  attempt 
to  carry  011  business  I  lost  all  I  had  and  was  wiped 
out  as  I  have  heretofore  explained. 

VIII.— Before  January,  1909,  the  prices  at 
which  I  purchased  film  wore  less  than  the  soiled- 
ule  fixed  under  the  exchange  license  agreement. 

J.'he  highest  price  I  over  paid  for  film  was  twelve 
cents  a  foot,  to  the  Edison  Company,  and  not 
more  than  ten  cents  a  foot  to  any  of  the  other 
manufacturers,  and  to  most  of  the  manufacturers 
less  than  ten  cents  a  foot— some  of  them  seven 
and  one-half  cents  a  foot,  depending  011  the  quant¬ 
ity  purchased — and  of  the  same  quality,  kind  and 
run  as  in  the  schedule  of  the  exchange  license 
agreement  was  to  be  leased  to  the  rental  ex¬ 
changes  at  thirteen,  eleven  and  nine  cents  a  foot, 


1  ....  i 


328  {Affidavit  of  William  II.  Stvanson.) 

so  that  the  prices  at  which  the  films  were  to  he 
leased  from  the  licensed  manufacturers  wore 
greatly  in  excess  of  the  prices  at  which  I  had  previ¬ 
ously  purchased  the,  films.  Directly  after  the  for¬ 
mation  of  the  Motion  Picture  Patents  Company  I 
was  notified  by  the  various  projecting  machino 
manufacturers  that  the  minimum  price  for  a  pro¬ 
jecting  machino  would  he  raised  from  Ninety-five 
dollars  and  One  hundred  dollars,  which  were  the 
then  prevailing  prices,  to  One  hundred  and  fifty- 
five  dollars,  and  in  some  instances  to  Two  hundred 

329  and  twenty-five  dollars.  This  rise  of  price  by  the 
projecting  machine  manufacturers,  I  am  informed, 
was  accomplished  by  a  combination  between  the 
projecting  machine  manufacturers  and  the  Motion 
Picture  Patents  Company,  under  which  the  man¬ 
ufacturers  paid  a  royalty  of  Five  dollars  on  each 
machine,  and  the  concerns  which  wore  manufac¬ 
turing  the  machines  were  licensed  by  the  Motion 
Picture  Patents  Company  or  driven  out  of  busi¬ 
ness,  as  no  exhibitor  under  a  license  exchange 
agreement  was  permitted  to  exhibit  films  on  any 
but  licensed  machines,  and  every  machine  was  re¬ 
quired  to  have  attached  a  label  to  the  effect  that 

330  it  was  duly  licensed  by  the  Motion  Picture  Pat¬ 
ents  Company. 

William  II.  Swanson. 

Sworn  to  before  me  this  15th? 
day  of  December,  1911.  j 
Louis  Cohen, 

Notary  Public,  No.  54, 

N.  Y.  County. 


Ill 

SUPREME  COURT, 


against 


Motion  Pictuhe  Patents  Com¬ 
pany  and  others, 

Defendants. 


State  and  County  op  New  Yoiik — ss: 

James  J.  Lodge,  being  duly  sworn,  says : 

I  live  in  Chicago,  Illinois,  and  am  Vice-Presi¬ 
dent  and  General  Mannger  of  George  Melios 
Manufacturing  Company,  a  corporation  organized 
under  the  laws  of  the  State  of  Illinois,  and  carry¬ 
ing  on  business  in  Chicago. 

The  defendant  Melios  Manufacturing  Company 
is  a  Now  York  corporation,  formed  about  July, 
1910,  by  Gaston  Melios,  who  was  and  still  is  Presi¬ 
dent  of  the  George  Melios  Manufacturing  Com¬ 
pany.  He  offered  his  resignation  as  such  Presi¬ 
dent,  but  our  Company  refused  to  accept  it. 

Said  Gaston  Melios  and  his  son,  Paul  Melies, 
who  was  an  employe  of  our  Company,  left  that 
Company  in  the  summer  of  1910,  induced,  as  I 
have  always  believed,  by  the  Motion  Picture  Pat¬ 
ents  Company  and  others,  and  organized  the 
Melies  Manufacturing  Company. 


334 


(Affidavit  of  James  J.  Lodge.) 


My  company,  tlic  George  Holies  Manufactur¬ 
ing  Company,  was  one  of  the  original  “licensed 
manufacturers”  under  license  granted  by  the 
Motion  Picture  Patents  Company  in  or  about 
December,  1908. 

Such  a  license  was  signed  by  the  Patents  Com¬ 
pany  and  by  myself  in  behalf  of  my  company,  and 
nothing  remained  but  to  attach  the  seal  of  the 
Patents  Company.  The  license  was  left  with 
Prank  L.  Dyer,  President  of  the  Patents  Com¬ 
pany,  for  the  purpose  of  having  the  seal  of  his 
335  company  attached  and  on  his  promise  to  have  the 
seal  attached  and  forwarded  to  me  in  Chicago. 
The  license  never  was  forwarded  to  me,  and  I  saw 
such  license,  for  the  first  time  since  its  execution, 
about  12  months  ago,  in  the  course  of  talcing  testi¬ 
mony  in  a  suit  brought  by  my  company  against 
the  Motion  Pitouro  Patents  Company  to  compel 
the  Motion  Picture  Patents  Company  to  deliver 
the  license  and  specifically  perform  its  undertak¬ 
ings  therein.  That  suit  is  ponding  in  the  United 
States  Circuit  Court  for  the  District  of  New 
Jersey. 

The  licenses  granted  by  the  Patents  Company 
33^  to  the  so-called  licensed  manufacturers  wore 
identical  in  terms.  One  of  the  provisions  of  each 
of  those  license  agreements  was  that  the  licensed 
manufacturer  covenanted  not  to  supply  film  to 
any  film  rental  agency  which  was  not  licensed  by 
the  Motion  Picture  Patents  Company.  It  was 
agreed  among  all  the  licensed  manufacturers  and 
the  Patents  Company,  at  the  time  when  the  license 
agreements  were  made,  that  the  licensed  manu¬ 
facturers  wore  under  obligation  to  and  would  fur¬ 
nish  the  film  manufactured  by  them,  respectively, 
to  all  film  rental  agencies  in  the  United  States 


(Affidavit  of  James  J.  Lodge.) 

that  wore  licensed  or  should  be  licensed  by  the 
Motion  Pioturo  Patents  Company.  This  was  a 
frequent  subject  of  discussion  at  mootings  of  the 
licensed  manufacturers  with  officers  of  the  Motion 
Picture  Patents  Company.  One  or  more  officers 
of  the  Patents  Company,  usually  Mr.  Frank  L. 
Dyer,  the  President,  or  Mr.  Marvin,  the  Vice- 
President,  or  Mr.  Kennedy,  the  Treasurer,  were 
almost  always  present  at  meetings  of  the  manu¬ 
facturers. 

The  agreement  and  obligation  of  the  licensed 
manufacturers  to  furnish  film  to  all  licensed  film 
rental  agencies  was  just  as  distinot  and  well  un¬ 
derstood  as  their  written  obligation  in  their  li¬ 
cense  agreements  not  to  furnish  their  film  to  any 
rental  agency  that  wTas  not  licensed  by  the  Pat¬ 
ents  Company. 

Immediately  after,  as  I  understood,  my  com¬ 
pany  had  been  licensed  by  the  Patents  Company, 
it  received  from  the  Patents  Company  a  list  of 
licensed  rental  agencies,  with  instructions  to  sup¬ 
ply  film  to  no  other  agencies,  and  from  time  to 
time  thereafter  received  revised  lists  showing 
changes  in  the  licensed  rental  agencies,  some  of 
the  licensed  agencies  having  been  eliminated,  and 
our  instructions  were  not  to  supply  any  film  to 
such  agency  whoso  license  had  been  cancelled. 

For  a  considerable  time  before  the  formation  of 
the  General  Film  Company,  the  project  of  organ¬ 
izing  such  a  company  for  the  purpose  of  control¬ 
ling  the  business  of  supplying  films  to  licensed  ex¬ 
hibitors  was  discussed  at  meetings  of  the  licensed 
manufacturers  and  the  Patents  Company,  and  it 
was  agreed  that  such  a  corporation  should  bo 
formed  for  that  purpose,  and  that  the  licensed 
film  rental  agencies  throughout  the  United  States 


338 


1 _  l  I 


340  (Affidavit  of  James  J.  Lodge.) 

should  bo  absorbed  by  the  now  corporation  to  bo 
composed  of  or  controlled  by  the  licensed  manu¬ 
facturers.. 

The  General  Film  Company  was  accordingly 
organized  under  the  laws  of  tho.Stato  of  Maine 
in  the  spring  of  1910,  and  my  information  is  that 
it  lias  absorbed  or  eliminated  every  film  rental 
agency  in  the  United  States,  except  the  Greater 
New  York  Film  Rental  Company. 

At  meetings  of  the  licensed  manufacturers  and 
the  Patents  Company  preceding  the  formation 

341  of  the  General  Film  Company,  it  was  stated  that 
every  licensed  manufacturer  would  have  the 
privilege  of  becoming  a  subscriber  for  stock  of 
the  General  Film  Company,  and  my  understand¬ 
ing  is  that  every  one  of  the  licensed  manufactur¬ 
ers,  except  perhaps  the  Melies  Manufacturing 
Company,  did  acquire  stock  in  the  General  Film 
Company,  either  in  its  own  name  or  in  the  name 
of  some  officer.  The  understanding  was  that  the 
licensed  manufacturers  were  to  share  equally  in 
the  stock  of  the  General  Film  ' Company.  The 
officers  and  directors  of  the  General  Film  Com¬ 
pany,  since  its  organization,  have  been  made  up 

34 2  of  officers  or  directors  or,  representatives  of  the 
licensed  manufacturers,  and  the  General  Film 
Company,  ever  since  its  organization,  has  been 
and  still  is  completely  controlled  by  the  licensed 
manufacturers,  and  is  simply  the  licensed  man¬ 
ufacturers  in  a  single  corporate  form.  I  do  not 
know  whether  the  Patents  Company  actually 
owns  or  controls  any  stock  in  the  General  Film 
Company,  but  the  relations  between  that  Com¬ 
pany  and  the  General  Film  Company,  and,  in¬ 
deed,  among  the  Patents  Company,  the  licensed 
manufacturers  and  the  General  Film  Company, 


m 

( Affidavit  of  James  J.  Lodge.)  343 

is  of  the  closest  character,  and  they  constitute  a 
single  control  and  are  practically  a  single  organ¬ 
ization. 

The  talk  bad  over  and  over  again  at  mootings 
of  the  licensed  manufacturers  and  the  Motion 
Picture  Patents  Company  was  to  the  effect  that 
the  film  rental  agencies  and  the  exhibitors  were 
making  a  disproportionate  profit  out  of  their  bus¬ 
iness  and  realizing  more  proportionately  than  the 
manufacturers,  and  flint  that  was  a  condition 
which  must  bo  remedied  by  getting  control  of  the 
supply  of  film  into  the  bands  of  the  manufactur-  344 
ors  and  the  Patents  Company  by  moans  of  the  or¬ 
ganization  of  such  corporation  as  the  General 
Film  Company,  and  that  such  corporation  when 
organized  would  bo  in  position  to  cliango  the 
rates  for  supplying  film  and  exact  a  rental  in 
proportion  to  the  profits  made  by  the  various  ex¬ 
hibitors. 

From  the  time  when  the  combination  between 
the  Patents  Company  and  the  licensed  manufac¬ 
turers  was  first  made  in  December,  1908,  the  in¬ 
tention  1ms  been  unswervingly  to  obtain  the  ex¬ 
clusive  control  of  and,  so  far  as  possible,  monopo¬ 
lize  every  branch  of  the  motion  picture  business,  345 
including  the  manufacture  of  the  cameras  with 
which  the  pictures  are  taken,  the  taking  of  mov¬ 
ing  pictures  upon  the  negative  films,  the  transfor- 
renee  thereof  to  the  positive  films,  the  manufac¬ 
ture  of  the  projecting  machines,  and  the  supply¬ 
ing  of  films  to  exhibitors. 

The  royally  of  $2  per  licensed  machine  per  week 
to  be  paid  by  licensed  exhibitors,  as  provided  in 
the  license  given  by  the  Patents  Company  to  the 
film  rental  agencies,  was,  by  agreement  between 
the  licensed  manufacturers  and  the  Patents  Com- 


llfi 

( Affidavit  of  James  J.  Lodge.) 

puny,  divided  as  follows :  A  percentage — I  do  not 
remember  whether  it  was  14  per  cent,  or  24  per 
cent. — was  divided  among  all  the  licensed  manu¬ 
facturers  in  proportion  to  the  quantity  of  nega¬ 
tive  film  produced  by  them  respectively ;  tlio  bal¬ 
ance  of  the  fund  was  to  bo,  and,  to  the  best  of  my 
knowledge,  was,  turned  over  to  the  Patents  Com¬ 
pany  for  the  payment  of  legal  expenses  involved 
in  bringing  and  defending  numerous  litigations 
over  patents  and  arising  out  of  the  various  stops 
and  proceedings  taken  by  the  Patents  Company  to 
, .  -  secure  control  of  the  situation. 

The  officers  of  the  Patents  Company,  and  par¬ 
ticularly  Mr.  Dyer  and  Mr.  Kennedy,  repeatedly 
assured  the  licensed  manufacturers  that  it  was 
only  a  question  of  time  when  the  Patents  Company 
would  control  the  whole  situation,  which  would 
accrue  to  the  benefit  of  all  the  manufacturers. 

The  projecting  machines  upon  which  the  above- 
mentioned  royalty  of  $2  each  per  week  is  exacted 
from  exhibitors,  are,  to  a  large  extent,  machines 
that  had  boon  bought  outright  by  exhibitors  or 
rental  agencies  during  the  past  ton  years  or  more, 
and  the  exaction  of  the  royalty  upon  machines, 
348  which  in  many  instances  had  for  many  years  been 
owned  outright  by  agencies  or  exhibitors,  was 
simply  an  arbitrary  exaction,  illustrating  the  at¬ 
titude  which  the  Patents  Company  and  the  li¬ 
censed  manufacturers  had  taken  toward  the  busi- 

J.  J.  Lonon. 

Sworn  to  before  me  this] 

15tli  day  of  December,  1911.  j 
Wm.  A.  Young, 

Notary  Public  No.  4,  > 

New  York  County. 


\ 


G heater  New  York  Film  Ren¬ 
tal  Company,  I 

Plaintiff, 

against 

Motion  Picture  Patents  Com¬ 
pany  and  others, 

Defendants. 


State  and  County  op  New  York,  ss. : 

Abraham  Carlos,  being  duly  sworn,  says: 

I  live  at  1517  Washington  Avenue,  in  the  Bor¬ 
ough  of  the  Bronx,  City  of  New  York,  and  am 
engaged  in  business  as  an  exhibitor  of  motion 
pictures  at  5780  Third  Avenue,  in  the  Borough 
of  the  Bronx,  City  of  New  York.  My  place  is 
licensed  by  the  Motion  Picture  Patents  Company, 
and  I  hold  a  license  signed  by  that  Company  au-  ^5 1 
thorizing  mo  to  carry  on  business  as  an  exhibitor 
of  licensed  motion  pictures,  and  am  required  to 
display  the  license  in  a  conspicuous  place  in  my 
theatre.  I  have  two  projecting  machines,  which 
are  also  licensed  by  the  Patents  Company. 

I  have  dealt  with  the  Greater  New  York  Film 
Rental  Company,  the  plaintiff  in  this  action,  since 
April,  1910,  obtaining  licensed  film  from  that 
company,  and  am  still  dealing  with  it. 

Before  April,  1910,  I  obtained  licensed  film 
from  the  Imperial  Filin  Exchange,  a  rental  agen- 


118 


3j2  ( Affidavit  of  Abraham  Carlos.) 

ay  engaged  in  business  in  the  Borough  of  Man¬ 
hattan,  City  of  New  York.  I  have  done  bitsinoss 
with  that  agency  since  December,  1908,  and  con¬ 
tinued  to  do  business  with  it  until  April,  1910, 
at  which  time  I  was  notified  by  the  Motion  Pic¬ 
ture  Patents  Company  that  the  license  of  the  Im¬ 
perial  Film  Exchange  had  been  cancelled,  and 
that  I  must  not  lease  any  more  film  from  that 
concern. 

Whenever  the  license  of  a  rental  agency  is  can¬ 
celled,  immediate  notice  of  the  fact  of  cancellation 

353  is  given  to  all  licensed  exhibitors,  warning  them 
not  to  take  any  more  film  from  that  agency. 

I  have  known  one  A1  Harstin  during  the  past 
three  or  four  years.  Ho  conducted  a  rental  ex¬ 
change  before  the  organization  of  the  Motion  Pic¬ 
ture  Patents  Company,  and  was  one  of  those  who 
did  not  obtain  a  license  from  the  Company.  lie 
handled  independent  or  unlicensed  film  for  some 
time  after  the  organization  of  the  Patents  Com¬ 
pany,  and  then  went  out  of  business  and  closed 
his  agency. 

During  the  past  three  or  four  months,  I  have 
known  Harstin  as  an  agent  or  solicitor  for  the 

354  General  Filin  Company,  and  ho  is  well  known 
throughout  the  trade  in  that  capacity,  and  deals 
with  many  licensed  exhibitors  in  behalf  of  the 
General  Film  Company. 

On  or  about  November  20,  1911,  said  Harstin 
called  upon  mo  at  my  place  of  business,  and  told 
me  that  the  license  of  the  Greater  New  York  Film 
Rental  Company  had  been  cancelled,  and  that 
within  a  week  or  so  it  would  get  no  more  films, 
and  he  urged  mo  to  make  a  contract  with  the  Gen¬ 
eral  Film  Company  for  film,  and  said  that  if  I 
would  make  the  contract  immediately  I  could  get 


( Affidavit  of  Abraham  Carlos.)  333 

a  better  contract  than  if  I  waited  until  after  the 
Greater  New  York  Company  had  lost  its  license, 
because  there  would  bo  so  muny  of  the  customers 
of  the  Greater  Now  York  Company  applying  to 
the  General  Film  Company  for  film  that  those 
who  name  early  would  get  the  best  “runs.” 

I  was  taking  the  fourth  and  fifth  “runs”  from 
the  Greater  New  York  Company,  and  Harstin  told 
me  that  the  General  Film  Company  could  take  just 
one  more  customer  iit  that  time  for  those  “runs,” 
and  that  if  I  would  make  a  contract  immediately 
I  would  get  those  “runs,”  and  that  ho  could  not  356 
promise  them  to  me  if  I  waited  another  week. 

I  told  him  I  would  take  the  chances,  and  refused 
to  make  a  contract  with  the  General  Film  Com¬ 
pany. 

Beginning  in  the  early  part  of  November,  1911, 
there  had  boon  frequent  rumors  that  the  Greater 
Now  York  Film  Rental  Company  would  soon  lose 
its  license,  and  I  know  several  exhibitors  who  had 
boon  dealing  with  the  Greater  New  York  Com¬ 
pany  who  became  frightened  and  left  it,  and  made 
contracts  with  the  General  Film  Company. 

Although,  as  is  well  known  in  the  trade,  the 
prices  charged  by  the  General  Film  Company  for  357 
its  films  have  generally  been  higher  than  those 
charged  by  the  Greater  Now  York  Company,  yet, 
during  the  last  two  months,  tile  General  Film  Com¬ 
pany  has  offered  lower  prices  to  customers  of  the 
Greater  Now  York  Company  for  the  purpose  of 
inducing  them  to  change.  It  has  offered  better 
“runs”  for  the  same  prices  ns  exhibitors  wore 
paying  for  less  desirable  “runs,”  and  has  also 
offered  to  supply  “specials” — that  is,  additional 
reels  over  and  above  those  regularly  supplied— 
without  additional  cost,  although  it  charges  its 


120 

( Affidavit  of  Abraham  Carlos .) 

regular  customers  extra  for  the  “specials,”  as 
does  the  Greater  New  York  Company. 

It  has  been  generally  believed  in  the  trade  tlint 
these  inducements  were  offered  merely  to  entice 
away  the  customers  of  the  Greater  New  York 
Company,  and  that  after  the  General  Film  Com¬ 
pany  had  got  control  of  them  the  prices  would  be 
raised. 

A.  Carlos. 

Sworn  to  before  me  this  35th) 
day  of  December,  1911.  J 
Raphael  Betll, 

Notary  Public, 

N.  Y.  County,  No.  109. 


360 


121 

SUPREME  COURT, 


Greater  New  York  Film  Rental 
Company, 

Plaintiff, 

against 

Motion  Picture  Patents  Com¬ 
pany  and  others, 

Defendants. 


State  and  County  of  Neiv  York,  ss. : 

Samuel  P.  Weissmann,  being  duly  sworn,  says: 

I  live  at  1327  Forty-third  Street,  in  the  Borough 
of  Brooklyn,  City  of  New  York,  and  am  engaged 
in  business  as  an  exhibitor  of  motion  pictures  at 
2138  Eighth  Avenue,  in  the  Borough  of  Manhat¬ 
tan,  City  of  New  York. 

I  have  dealt  with  the  Greater  Now  York  Film 
Rental  Company,  the  plaintiff  in  this  action,  for 
about  three  years,  leasing  licensed  film  from  it  for 
exhibition  in  my  place.  I  am  licensed  by  the  Mo: 
tion  Picture  Patents  Company  as  an  exhibitor. 

Early  in  November,  1911,  my  recollection  being 
Hint  it  was  between  the  fitli  and  lltli  of  November, 
one  A1  I-Iarstin,  whom  I  have  known  for  three 
or  four  months,  and  who  is  and  was,  at  the  time  of 
his  talk  with  me,  and  for  several  months  before 
that,  an  agent  of  the  General  Film  Company,  came 
to  mo  at  my  place  of  business,  and  told  me  that  the 
Greater  New  York  Film  Rental  Company  would 


364 


(Affidavit  of  Samuel  P.  Weissmann.) 


soon  lose  its  license,  that  the  license  was  about 
to  be  cancelled  by  the  Motion  Picture  Patents 
Company,  and  I10  urged  me  to  make  umuigoinoiilo 
through  him  with  the  General  Film  Company  for 
a  supply  of  licensed  Him  for  exhibition  in  my 
place  of  business. 

Before  this  conversation,  Ilarstin  had  called 
upon  mo  several  times,  and  tried  to  induce  mo  to 
leave  the  Greater  Now  York  Film  Rental  Com¬ 
pany  and  got  my  film  from  the  General  Film  Com¬ 
pany.  Ho  represented  the  Waters  Agency,  which 

365  was  controlled  by  the  General  Film  Company, 
and  he  assured  me  that  I  would  get  better  service, 
and  I10  offered  me  a  better  “run "  than  I  was  get¬ 
ting,  for  the  same  money  I  was  paying  to.  the 
Greater  Now  York  Company.  Such  contracts 
are  only  made  from  week  to  week,  and  there  would 
be  nothing  to  prevent  the  General  Film  Company 
from  raising  the  prices  after  the  first  week.  I 
refused  to  change,  however. 

At  the  conversation  in  November,  Ilarstin  said 
I  would  better  make  arrangements  immediately 
with,  the  General  Film  Company,  because  if  I  de¬ 
layed  another  week  I  would  not  bo  able  to  get  as 

366  good  a  deal  and  could  not  be  sure  of  as  good 
“runs”,  as  I  could  have  if  I  made  arrangements 
then.  Ho  said  that  the  Greater  New  York  Film 
Rental  Company  would  get  no  more  films  after 
Saturday,  November  18th. 

I  declined  to  make  any  arrangement  with  the 
General  Film  Company. 

It  is  generally  known  throughout  the  trade  that 
the  only  remaining  licensed  rental  agency  in  the 
City  of  Now  York,  excepting  the  General  Film 
Company,  is  the  plaintiff,  the  Greater  New  York 
Film  Rental  Company. 


123 


(Affidavit  of  Samuel  P.  IVeissmann.)  367 

Within  the  past  two  and  a  half  years  there  have 
been  a  number  of  such  licensed  exchanges  in  the 
City  of  Now  York,  but  they  have  all  been  absorbed 
by  the  General  Film  Company,  which  is  operat¬ 
ing  the  various  exchanges  under  the  former 
names. 

Before  the  organization  of  the  Motion  Picture 
Patents  Company,  there  wore  more  rental 
agencies  in  the  City  of  New  York  than  after  the 
organization  of  that  company,  because  it  was  gen¬ 
erally  understood  that  the  Company  refused  to 
license  a  number  of  the  former  agencies.  368 

Samuel  P.  Weissmann. 

Sworn  to  before  mo  this) 

10th  day  of  December,  1911.  J 
Raphael  Brill, 

Notary  Public, 

N.  Y.  County,  No.  109. 


369 


SUPREME  COURT, 

NEW  YORK  COUNTY. 


Greater  New  York  Film  Ren¬ 
tal  Company, 

Plaintiff, 

against 

Motion  Picture  Patents  Com- 
37 1  pany  and  others, 

Defendants. 


State  and  County  of  New  York,  ss. : 

Gustavus  A.  Rogers,  being  duly  sworn,  says : 

I  am  one  of  the  attorneys  for  the  plaintiff  in 
this  action,  which  is  about  to  he  begun  by  the  is¬ 
suance  of  the  accompanying  summons. 

The  attorneys  for  the  plaintiff  are  Messrs. 
Rogers  &  Rogers,  whose  office  and  Post  Office 
372  address  is  1G0  Broadway,  in  the  Borough  of  Man¬ 
hattan,  City  of  New  York. 

An  order  to  show  cause,  returnable  in  less  than 
five  days  is  asked  for  because  it  is  of  urgent  im¬ 
portance  that  the  motion  to  continue  the  injunc¬ 
tion  be  heard  without  delay. 

The  next  term  of  this  . Court  at  which  this  cause 
can  be  tried  is  appointed  to  be  held  in  New  York 
County  on  the  first  Monday  of  February,  1912. 


125 


( Affidavit  of  Gustavus  A.  Rogers.)  373 

No  previous  application  has  been  made  to  any 
Court  or  Judge  for  a  temporary  injunction  hero¬ 
in,  or  for  an  order  to  show  cause. 

Gustavus  A.  Rogers. 

Sworn  to  before,  mo  this! 
lfith  day  of  December,  1911.  J 
Raphael  Brill, 

Notary  Public,  No.  109, 

New  York  County. 


375 


January  21,  1916, 


Messrs .  Holdon  and  Lanahan: 

I  wish  you  would  draft  up  to-day,  so 
that  it  can  be  gotten  to  Mr.  Edison  not  later  than  tomorrow,  a 
memorandum  showing  the  exact  conditions  under  which  the  settlement 
was  made  with  Pox,  and  also  what  each  manufacturer,  the  0.  P.  Co., 
and  the  M.  P.  P.  Co.  got  in  the  way  of  releases  as  a  matter  of  future 
protection.  Please  send  me  copy  of  said  memorandum. 

I  am  going  out  of  town,  to  be  gone  until  Monday,  and 
am  anxious  that  Mr.  Edison  should  know  at  onoe  what  this  settlement 


CHW/IWW 


°-  ht' 


(k 


Us£  l 


Mr.  Vr'ils  on:- 


January  31,  1916. 

m  SETTLEMEHT  GREATER  MOT  YORK  FILM  RFHTAL  CO. 
vs.  GEHERAL  FILM  COMPAHY  et  al. 


The  settlement  fin  the  above  matter  was  effected  Jan¬ 
uary  1916  on  the  following  basis: 

The  sum  of  §300,000  was  paia  to  William  Fox  as  Presi¬ 
dent  of  and  on  behalf  of  the  Great  Hew  York  Film  Rental  Company, 
the  said  sum  being  contributed  equally  by  each  of  the  following 
named  parties,  that  is,  §30,000  each:  General  Film  Co.,  Vita- 
graph  Company  of  America,  Motion  Picture  Patents  Company,  Thomas 
A.  Edison,  Inc.,  Salem  Company,  Lubin  Manufacturing  Company, 
Essanay  Film  Manufacturing  Company,  Selig  Polyscope  Company, 
Pathe  Freres,  and  Biograph  Company.  The  Lubin  and  Selig  Com¬ 
panies  gave  notes  instead  of  cash. 

'The  Edison  Company  received  a  check  from  the  Greater 
Hew  York  Film  Rental  Company  amounting  to  §4.20  in  settlement 
of  the  Edison,  Ino.  account  against  the  Greater  Hew  York  Film 
Rental  Company* 

A  release  dated  January  19,  1916  was  duly  executed  in 
approximately  thirty  copies  by  the  Greater  Hew  York  Film  Rental 
Company,  William  Fox,  Eva  Fox  and  Michael  Fox.  Mr.  Holden  in¬ 
sisted  that  an  executed  copy  of  this  release  be  delivered  to  him 
before  turning  over  the  check  of  Thomas  A.  Edison,  Ino.,  and  such 
a  copy  was  so  delivered.  This  copy  ie  in  Mr.  Berggren*s  files. 
The  other  copies  were  placed  in  the  hands  of  Mr.  George  F.  Soull 
to  be  delivered  to. the  several  defendants  upon  the  execution  of 


oertain  releases  running  to  the  Greater  Hew  York  Film  Rental 
Company  and  William  Fox  ana  to  he  executed  hy  certain  of  the 
defendants.  We  have  delivered  to  Mr.  Soull  the  following 
releases : 

General  Release  dated  January  19,  1916  of  Greater  Hew 
York  Film  Rental  Company  and  William  Fox  hy  Thomas  a.  Edison, 
Inc. 

General  Roloase  dated  January  19,  1916  of  Greater  Hew 
York  Film  Rental  Company  and  William  Fox  hy  Edison  Manufac¬ 
turing  Company. 

Copies  of  these  releases  are  on  file  with  Mr.  Berggren.  The 
release  received  hy  us  and  now  on  file  with  Mr.  Berggren  runs 
to  various  corporations  and  individuals  named  therein  and  in¬ 
cluding  the  following:  Thomas  A.  Edison,  Inc.,  Edison  Manu¬ 

facturing  Company,  Frank  I.  Dyer  and  William  Belzer.  it  is  ex¬ 
pected  that  each  of  the  releasees  will  ultimately  receive  an  exe¬ 
cuted  copy  of  this  release.  This  release  also  extends  to  all 
offioers  or  employees  now  or  heretofore  oonneoted  with  the  said 
several  corporations  with  respect  to  oertain  acts.  The  Greater 
Hew  York  Film  Rental  Company  also  relinquished  any  olaim  or  right 
it  may  have  had  under  any  contract  to  he  supplied  with  film  hy 
any  of  the  licensed  manufacturers  named  in  the  release.  For  the 

exact  terms  of  this  document,  reference  should  he  made  to  the 
original. 


-3- 


Y/hile  the  release  of  the  defendants  was  signed  by 
offioers  of  the  Greater  How  York  Film  Rental  Company  and  by  all 
of  its  stockholders,  there  were  also  resolutions  adopted  at  a 
stockholders  meeting  and  at  a  directors  meeting,  authorizing  the 
execution  of  the  roleaso,  and  certified  copies  of  these  resolu¬ 
tions  are  on  file  with  the  General  Film  Company, 

Provision  was  made  for  the  discontinuance  of  suit,  and 
I  understand  that  a  stipulation  was  entered  into  by  the  attorneys 
for  the  respective  parties  providing  for  the  entry  of  an  order  for 
this  purpose.  Hr.  Scull  is  familiar  with  this  feature  of  the 
matter. 

There  was  also  an  agreement  entered  into  between  the 
Greater  Hew  York  Film  Rental  Company  and  the  General  Film  Company, 
whereby  the  General  Film  Company,  for  the  payment  of  $60,000  in 
twenty- five  promissory  notes  of  S2000  each,  payable  on  Jan.  86, 

1916  and  each  of  the  twenty-four  weeks  thereafter,  purchased  from 
the  Greater  Hew  York  Film  Rental  Company  the  latter’s  entire  stook 
of  motion  picture  film,  eta.,  and  took  over  oertain  leases  and  also 
assumed  certain  liabilities  of  the  Greater  Hew  York  Company.  For 
the  exact  terms  of  this  agreement,  reference  should  be  had  to  the 
copy  thereof. 

During  negotiations  leading  til  the  above  settlement, 
a  preliminary  agreement  was  made  between  the  manufacturers  to 
subscribe  a  fund  amounting  to  $300,000,  to  be  contributed  to 
equally  by  the  following  companies,  namely:  General  Film  Co., 


m 


-4- 

Vita graph  Company  of  America,  Motion  Pioture  Patents  Company, 
Thomas  A.  Edison,  Inc,,  Kalem  Company,  Bubin  Manufacturing  Co., 
Essanay  Film  Manufacturing  Company,  Selig  Polyscope  Company, 
Pathe  Ere res,  and  Biograph  Company,  which  said  fund  was  to  he 
placed  in  the  hands  of  Messrs.  Albert  E.  Smith,  Frank  J.  Marion 
and  Jeremiah  J.  Kennedy  as  Trustees,  and  to  he  used  to  pay  any 
final  judgment  which  may  ho  obtained  in  the  suit  or  to  effect 
a  settlement.  Inasmuch  as  a  settlement  was  actually  made  the 
next  day,  namely,  January  19,  1916,  thiB  agreement  became  of  no 
importance.  A  copy  of  the  Bame  O.K.M  by  Mr.  Edison  is  on  file 
with  Mr.  Berggren. 


HL-JS 


%'(-  13 


.  Hr.  Berggren:- 


January  31,  1916 


BE  SffiffiffiEHEHT  GRINDER  DEW  YORE  El  HI  RPH3?aX,  CO.  va 
GEITERAB  EIIM  CQMPAIIY  ot  al.  0  VS* 


During  the  negotiations  leading  to  the  above  settlement, 
a  preliminary  agreement  was  made  between  the  manufacturers  to 
subscribe  a  fund  amounting  to  §300,000,  to  be  contributed  to 
equally  by  tho  following  companies,  namely:  General  Film  Com¬ 
pany,  Vitagraph  Company  of  America,  Motion  Picture  Patents  Co., 
Thomas  A.  Edison,  inc.,  Ealem  Company,  lub in  Manufacturing  Co., 
Essanay  Film  Manufacturing  Company,  Selig  Polyscope  Company, 

Rathe  Erores,  and  Biograph  Company,  and  to  be  placed  in  the 
hands  of  Messrs.  Albert  B.  Smith.  Erank  J.  Marion,  and  Jeremiah 
J.  Kennedy  as  Trustees,  and  to  be  used  to  pay  any  final  judgnent 
that  might  be  obtained  in  the  suit  or  to  effect  a  settlement. 
Inasmuch  aB  the  Battlement  was  aotually  made  the  next  day,  namely,  ’ 
January  19th,  this  agreement  became  of  no  importance.  However," 

I  hand  you  a  copy  of  the  same  which  should  be  filed  with, the 
other  papers  relating  to  this  matter.  This  copy  is  of  Importance 
because  it  has  boon  O.K.'d  by  Mr.  Edison,  and  Mr.  Wilson  ahd  Hr. 
Holden  consider  it  as  evidencing  their  authority  to  make  tk 
settlement  finally  entered  into.  '  - 

Kindly  acknowledge  receipt  of  this  paper. 


HL-JS 


Legal  Department  Records 
Motion  Pictures  -  Case  Files 


Motion  Picture  Patents  Company  v. 

Independent  Moving  Picture  Company  of  America 

This  folder  contains  material  pertaining  to  the  suit  brought  by  the  Motion 
Picture  Patents  Co.  against  the  Independent  Moving  Picture  Co.  in  the  U.S. 
Circuit  Court  for  the  Southern  District  of  New  York.  The  case  was  initiated  in 
February  1 91 0  and  involved  the  alleged  infringement  of  Woodville  Latham's 
U.S.  Patent  707,934.  The  selected  items  are  from  the  complainant's  record 
and  consist  of  the  index,  bill  of  complaint,  and  testimony  of  William  K.  L. 
Dickson. 


[PHOTOCOPY] 


[PHOTOCOPY] 


PAGE 

Bill  of  Complaint  .  1 

Replication  .  g 


Testimony. 


Fred  A.  Dobson, 

Direct 

William  Main, 


Direct  . 

Eugene  Lauste, 

Direct  . 
Cross  . . 
Redirect 
Recross  . 

William  K.  L.  Dickson, 


Direct  . 

Cross-examination 

Redirect  . 


de 


Recross 

Raphael  Retter, 

Direct  . . 

Redirect 

Recross 

Woodville  Latham, 

Direct  . 
Cross  . . 
Redirect 
Recross 


09 

S2 

117 

119 

120 

144 

1S4 

1S4 

1SG 

190 

215 

210 

219 

25S 

329 

330 


Emil  W.  Kleinert,  ' 


Direct 


[PHOTOCOPY] 


Frederick  A.  Anthony, 

Direct  . 
Cross  . . . 

Thomas  W.  Stephens, 

Direct  . 
Cross  . . 

Harry  B.  Marvin, 

Direct  . 
Cross  . . 
Bedirect 
Kecross 

Parker  W.  Page, 

Direct  . 

Frank  B.  Waterman, 

Direct 
Cross  . 

Thomas  Armat, 

Direct 
Cross  . 


370 

379 

3S4 


400 

402 


403 

407 

40S 

447 

511 

504 


Papers  referred  to  and  reproduced: 

Jenkins  Letter  of  April  25,  1890  .  552 

Jenkins  Letter  of  Ang.  30,  1895  .  553 

Jenkins  Letter  of  Aug.  8,  1895  .  557 

Extract  Jenkins  Letter  Sept.  7,  1895  .  559 

Extract  Jenkins  Testimony  in  Armat  Case  . .  501 
Extract  from  Jenkins  Becord .  509 


Complainant’s  Exhibits: 


Latham  Patent  in  Suit .  10  700 

E.  &  H.  T.  Anthony  &  Co.,  Assign¬ 
ment  . 11 

Anthony  &  Scovill  Co.,  Assignment.  11  01 

Mutoscope  &  Biograph  Co.,  Assign¬ 
ment  .  11  58 

Ansco  Co.,  Assignment .  12  07 


iii 

Complainant’s  Certificate  of  Incor- 


^  poration  .  12 

Drawing  of  Defendant’s  Camera  ...  15  720 

Warwick  Camera  .  40 

Certified  Copy  of  Latham  Drawings  79 

Lauste’s  Deposition  in  Latham-Casler 

Interference .  SO 

Lauste  Photograph .  117 

Lauste  Sketch  of  First  Taking  Ma¬ 
chine  .  119  722 

Film  of  Grififo  &  Barnet  Fight . 130 

1  i  Better  1S97  Deposition  .  ISO 

Woodville  Latham’s''  Deposition  in 

Armat  Interference  .  220 

Otway  Latham’s  Deposition  in  Ar¬ 
mat  Interference  .  220  031 

Gray  Latham’s  Deposition  in  Armat 

Interference  .  220  078 

Otway  Latham  Bote  of  Experiment  224 
Article  in  Sunday  Mercury,  May  5, 

1S95  .  237 

Clipping  from  Sun,  April  22,  1S95  . .  239 

Colt  Bills  and  Letter  .  255 

Latham  Exhibit  Bo.  7  .  250 

Clipping  from  Chicago  Inter-Ocean . .  258 

Latham’s  British  Patent,  1890  .  2S8 

Bill  of  Boston  Gear  Works .  029  344 

Eastman  Kodak  Co.  Bill,  Feby.  IS, 

1S95  . ’ . 029 

Eastman  Kodak  Co.  Bill,  April  5, 

1S95  .  030 

Eastman  Kodak  Co.  Bill,  April  27, 

1895  .  030 

Decision  of  Court  of  Appeals  in  Ar¬ 
mat  Interference  .  031 


[PHOTOCOPY] 


& 


Circuit  Court  of  the  United  States 

Southern  District  of  New  York. 


In  Equity, 
No. 

Patent  No. 

707,934, 

Latliam. 


To  the  Honorable  the  Judges  of  the  United 
States  Circuit  Court  for  the  Southern 
(District  of  New  York  : 

The  Motion  Picture  Patents  Company,  a  cor¬ 
poration  organized  and  existing  under  the  laws 
of  the  State  of  New  Jersey,  and  haying  a  regular 
and  established  place  of  business  at  New  York 
City,  in  the  County  and  State  of  New  York,  brings 
this  its  bill  of  complaint  against  Independent  Mov¬ 
ing  Picture  Company  of  America,  a  corporation 
organized  and  existing  under  the  laws  of  the  State 
of  Illinois,  and  having  a  regular  and  established 
place  of  business  at  No.  Ill  East  14th  Street,  in 
the  Borough  of  Manhattan,  City  of  New  York, 


Motion  Picture  Patents  Com- 
i  ^Complainant, 


.Independent  Moving  Picture 
Company  of  America,  . 

Defendant. 


[PHOTOCOPY] 


County  and  State  of  New  York,  within  the  South- 
orn  Judicial  District  of  New.  York,  within  which 
district,  as  well  as  elsewhere  throughout  the  United 
States  the  acts  of  infringement  hereinafter  com¬ 
plained  of  have  been  committed. 

And  thereupon'  your  orator  complains  and  says 
that  it  is  informed  and  believes,  and  therefore 
avers,  as  follows: 

I.  That  prior  to  the  1st  day  of  June,  1896,  one 
Woodville  Latham,  a  citizen  of  the  United  States, 
residing  in  the  City,  County  and  State  of  New 
York,  was  the  first  original  and  sole  inventor  or  dis¬ 
coverer  of  certain  new  and  useful  improvements 
in  projecting  kinetoscopos,  which  were  not  known 
or  used  by  others  in  this  country  before  his  in¬ 
vention  or  discovery  thereof,  and  not  patented  or 
described  in  any  printed  publienton  in  this  or  any 
foreign  country,  before  his  invention  or  discovery 
thereof,  or  more  than  two  years  prior  to  the  ap- 
plication  below  mentioned,  and  not  in  public  use  01 
on  sale  in  the  United  States  for  more  than  two 
years  prior  to  his  said  application,  and  not  aban¬ 
doned  by  him;  and  that  the  said  Woodville  Latham 
duly  made  application  for  letters  patent  of  the 
United  States  for  the  said  invention  or  discovery 
on  or  about  the  1st  day  of  June,  1S96,  in  accord¬ 
ance  with  the  then  existing  laws  of  Congress. 

II.  That  thereafter  by  certain  mesne  assign¬ 
ments  in  writing,  duly  executed  and  delivered,  and 
duly  recorded  in  the  United  States  Patent  Office, 
the  E  &  H.  T.  Anthony  &  Company,  a  corpora¬ 
tion  of  the  State  of  New  York  acquired  the  entire 
ri„l,t  title  and  interest  to  the  said  invention  or 
discovery  in  projecting  kinetoscopes  and  in  and  to 
qnirl  armlication  for  letters  patent,  and  to  nny 


3. 

letters  patent  which  might  be  granted  for  the  said  7 
invention  or  discovery,  which  said  assignment  or 
a  duly  certified  copy  thereof  is  ready  to  be  pro¬ 
duced  in  Court/If  your  Honors  so  require. 

III.  That  after  the  requirements  of  the  then 
existing  laws  of  Congress  had  been  duly  complied 
with  in  all  respects  by  said  applicant  and  his  suc¬ 
cessors  in  interest,  letters  patent  of  the  United 
States  numbered  707,931,  signed,  sealed  and  exe¬ 
cuted  in  due  form  of  law,  for  the  said  invention 
or  discovery,  were  granted  in  the  name  of  the  said 
Woodville  Latham  aS  assignor  to  the  said  E.  &  H. 

T.  Anthony  &  Company  on  the  26th  day  of  August,  8 
1902,  whereby, there  was  secured  to  the  said  E.  & 

H.  T.  Anthony  &  Company,  their  successors,  legal 
representatives  and  assigns,  for  a  term  of  seven¬ 
teen  years  from  the  said  date,  the  full  and  exclu¬ 
sive  right  of  making,  using  and  selling,  and  of  caus¬ 
ing  tp  be  made,  used  and  sold  throughout  the 
United  States,  the  said  improvements  in  projecting 
kinetoscopes,  as  by  said  letters  patent,  or  a  duly 
certified  copy  thereof,  to  be  produced  in  Court  will 
more  fully  and  at  large  appear. 

IAr.  That,  by  certain  mesne  assignments  in  writ-  g 
ing,  duly  executed  and  delivered  and  duly  record-  > 
ed  in  tile  United  States  Patent  Office,  all  the  right, 
title  and  interest  in  and  to  the  said  invention  or 
discovery  in  projecting  kinetoscopes,  and  in  and  to 
the  said  letters  patent  therefor,  including  the  right 
to  sne  for  and  collect  all  damages  and  profits  there¬ 
tofore  accrued  by  reason  of  past  infringements  ot 
the  said  letters  patent  by  the  manufacture,  use  or 
sale  of  apparatus  embodying  the  said  invention  or 
discovery,  passed  to  and  were  acquired  by  your  or¬ 
ator;  and  your  orator  is  now  the  full  and  exclusive 


[PHOTOCOPY] 


«' 


5 


owner  of  said  letters  patent  and  all  rights  there¬ 
under,  as  by  said  assignments  or  duly  certified 
copies  thereof  to  he  produced  in  Court  will  more 
fully  and  at  large  appear. 


Y.  That  the  utility  and  validity  of  said  inven- 
■ions  and  said  letters  patent  have  been  widely  recog¬ 
nized  and  acquiesced  in  by  the  public,  and  that 
pour  orator  and  its  predecessors  have  expended 
great  efforts  and  large  sums  of  money  introduc¬ 
ing  said  patented  invention  into  practice;  and  that 
your  orator  and  its  predecessors  have  enjoyed,  and 
but  for  the  infringements  hereinafter  set  forth  and 
others  similar  thereto  would  still  he  enjoying  all 
the  benefits  and  advantages  of  the  said  invention. 


VI.  That  your  orator  and  its  predecessors  have 
riven  'due  notice  to  the  public  of  the  grant  of  said 
letters  patent  No.  707,934  and  of  its  rights  tliere- 
ander,  in  the  manner  prescribed  by  law. 


YU.  That  the  defendant  has  well  known  all  the 
facts  hereinbefore  set  forth,  but  contriving  and 
conspiring  with  others  to  injure  your  orator  and 
to  deprive  it  of  the  profits,  benefits  and  advantages 
whicli  might  and  otherwise  would  have  accrued  to 
your  orator  from  the  said  patent,  has,  since  the 
date  of  its  issue,  and  also  since  the  acquirement  of 
the  said  letters  patent  by  your  orator,  without  the 
license  of  your  orator  and  against  your  orator’s 
will  and  in  violation  of  its  rights,  made,  used  and 
sold  and  caused  to  be  made,  used  and  sold,  and 
now  continues  to  make,  use  and  sell,  within  the 
Southern  District  of  New  York  and  elsewhere  in 
the  United  States  moving  picture  apparatus,  each 
of  which  embodies  the  invention  or  discovery  de¬ 
scribed  and  claimed  in  your  orator's  said  patent 
707,934,  the  exclusive  right  to  make,  use  and  sell 


which  is  by  law  vested  in  your  orator  as  aforesaid ; 
and  the  said  defendant  in  disregard  of  your 
orator’s  rights  refuses  to  pay  to  your  orator  the 
profits  which  it  has  made  by  such  unlawful  manu¬ 
facture,  use  and  sale  or  to  desist  from  further  in¬ 
fringement  of  the  said  patent;  all  of  which  acts 
are  in  violation  of  your  orator’s  rights  and  are 
contrary  to  equity  and  good  conscience  and  tend 
to  the  manifest  injury  of  your  orator  in  the  prem¬ 
ises. 

VIII.  That  by  reason  of  the  said  unlawful  acts  of 
the  defendant,  your  '■orator  has  suffered  and  still 
suffers  great  and  irreparable  loss  and  injury,  and 
lias  been  deprived  and  is  being  deprived,  of  great 
gains  and  promts  which  it  otherwise  would  have 
received  and  enjoyed,  hut  which  have  been  received 
and  enjoyed  by  the  said  defendant;  that  the  said 
defendant  intends  and  threatens  to  continue  such 
infringement  and  is  prepared  and  ready  so  to  do ; 
and  that  your  orator  is  unable  to  state  how  many 
machines  employing  the  invention  described  and 
claimed  in  the  said  patent  have  been  unlawfully 
made,  used  or  sold  as  aforesaid  by  the  said  defend¬ 
ant,  and  is  unable  to  state  the.  extent  of  the  profits 
received  and  enjoyed  as  aforesaid  by  the  defendant 
from  such  unlawful  making,  using  and  selling,  but 
that  your  orator  believes  the  same  to  have  been 
very  large  and  prays  a  discovery  thereof.  . 

IX.  Your  orator  therefore  prays : 

1.  That  the  said  defendant,  Independent  Moving 
Picture  Company  of  America,  may  be  required  to 
make,  according  to  the  best  of  its  knowledge,  in¬ 
formation  and  belief,  full,  true,  direct  and  perfect 
answer  (not  however  under  oath,  which  is  hereby 
expressly  waived)  to  all  matters  hereinbefore 


[PHOTOCOPY] 


0 


16  stated  and  cliarged  the  same  as  if  specifically  inter¬ 
rogated  as  to  each. 

2:That  a  writ  or  writs  of  subpoena  ad  respond¬ 
endum  may  issue  from  and  under  the  seal  of  this 
Court,  directed  to  the  said  defendant,  Independent 
Moving  Picture  Company  of  America,  commanding 
it  to  appear  and  answer  unto  this  bill  on  a  day  cer¬ 
tain  therein  to  be  named,  and  to' abide  by  and  per¬ 
form  such  order  or  decree  in  the  premises  as  to  this 
Court  shall  seem  meet  and  as  may  be  required  by 
the  principles  of  equity  and  good  conscience. 

17  3.  That  the  defendant,  Independent  Moving  Pic¬ 
ture  Company  of  America,  may  be  decreed  to  ac¬ 
count  for  and  pay  to  your  orator  the  profits  unlaw¬ 
fully  derived  as  aforesaid  from  the  violation  of 
your  orator’s  rights;  and  that  upon  entering  the 
decree  against  the  defendant  your  Honors  may  as¬ 
sess  or  caused  to  be  assessed  under  your  direction 
the  said  defendant’s  unlawful  profits,  and  in  addi¬ 
tion  thereto  the  damages  sustained  by  your  orator 
by  reason  of  the  said  infringement;  and  that  your 
Honors  may  increase  the  actual  damages  so  as¬ 
sessed  to  a  sum  equal  to  .three  times  the  amount 

IS  thereof  under  the  circumstances  of  the  unlawful 
and  unjust  infringement. 

4.  That  a  writ  of  injunction  may  be  issued  out  of 
and  under  the  seal  of  this  Honorable  Court,  per¬ 
petually  restraining  and  enjoining  the  said  defend¬ 
ant,  Independent  Moving  Picture  Company  of 
America,  its  agents,  attorneys,  officers,  clerks,  em¬ 
ployees,  servants  and  workmen,  from  any  further 
manufacture,  use  or  sale  in  any  manner  of  the  said 
patented  improvements,  or  any  part  thereof  in  vio¬ 
lation  of  your  orator's  said  rights;  and  that  the 


infringing  devices  in  possession  of  or  use  by  the  de¬ 
fendant  may  be  decreed  to  be  destroyed  or  de¬ 
livered  to  your  orator  for  that  purpose. 

5.  That  a  provisional  or  preliminary  injunction- 
may  be  issued  out  of  and  under  the  seal  of  this 
Honorable  Court  restraining  and  enjoining  the 
said  defendant,  Independent  Moving  Picture  Com¬ 
pany  of  America,  its  agents, '  attorneys,  officer's, 
clerks,  employees,  servants  and  workmen  from  any 
further  manufacture,  use  or  sale  in  any  manner  of 
the  said  patented  improvements  or  any  part  there¬ 
of,  pending  this  cause.  *» 

6.  That  such  other  and  further  relief  may  be 
granted  and  decreed  to  your  orator  as  the  equities 
of  tlie  case  may  require  and  as  io  your  Honors 
may  seem  meet. 

MOTION  PICTURE  PATENTS  COMPANY, 

By  George  F.  Scull. 

Secretary. 

Keiir,  Page,  Cooper  &  Haywood, 

Solicitors  and  of  Counsel  for  Complainant. 

Parker  W.  Page, 

Of  Counsel. 


State  of  New'  Jersey. 


George  F.  Scull,  being  duly  sworn,  deposes  and 
says : 


I  nin  Secretary  of  the  Moving  Picture  Patents 
Company  the  complainant  corporation  named  m 


[PHOTOCOPY] 


II 


9 


22-  the  foregoing  bill  of  complaint;  I. turn  read  the 
said  bill  of  complaint  and  of  my  own  knowledge 
know  it  to  be  true,  except  as  to  the  matters  there¬ 
in  stated  to  be  alleged  upon  information  and  be¬ 
lief,  and  as  to  those  matters  I  believe  it  to  be  true. 

GEORGE  F.  SCULL. 

•  Subscribed  and  sworn  to  be¬ 
fore  me  this  9tli  day  of 
February,  1910. 

Anna  R.  Klehm, 

23  Notary  Public, 

State  of  New  Jersey, 

Commission  expires  June,  1913. 


CIRCUIT  COURT  OF  THE  UNITED  STATES, 
Southern  District  op  New  York. 


Motion  Picture  Patents  Com¬ 
pany,  i 

Complainant,  l 


Independent  Moving  Picture  l 
Company  op  America,  1 
Defendant. 


The  replication  of  the  above-named  complainant 
to  the  answer  of  the  above-named  defendant. 

The  repliant,  saving  and  reserving  to  itself  all 
and  all  manner  of  advantage  of  exceptions  winch 


may  be  had  and  taken  to  the  manifold  errors,  un-  25 
certainties  and  insufficiencies  of  the  answer  of  said 
defendant,  for  replication  thereunto  saith  that  it 
does  and  will  aver,  maintain  and  prove  its  said 
bill  to  be  true,  certain  and  sufficient  in  the  law  to 
be  answered  unto  by  said  defendant,  and  that  the 
answer  of  said  defendant  is  very  uncertain,  evasive 
and  insufficient  in  the  law  to  be  replied  unto  by 
this  repliant;  without  that,  that  any  other  matter 
or  thing  in  the  said  answer  contained  material  or 
effectual  in  the  law  to  be  replied  unto,  confessed  or 
avoided,  traversed  or  denied,  is  true;  all  which 
matters  and  things  tjiis  repliant  is  ready  to  aver, 
maintain  and  prove  as  this  Honorable  Court  shall  23 
direct,  and  humbly  prays  as  in  and  by  its  said  bill 
it  has  already  prayed. 

Dated,  New  York,  Hay  11th,  1910. 

KERR,  PAGE,  COOPER  &  HAYWARD, 

Solicitors  for  Complainant., 


[PHOTOCOPY] 


New  York,  April  10, 1911, 11  A  nr 

Met  pursuant  to  adjournment  at  the  offices  of 
Kerr,  Page,  Cooper  &  Hayward,  149  Broadway 
New  York  City. 

Present-PARKER  W.  PaGE,  Esq./  Counsel  for  Com¬ 
plainant.  Mr.  Bichard  Eyre,  Counsel  for  De¬ 
fendant. 


WILLIAM  K.  It.  DICKSON,  a  witness  called  on 
behalf  of  the  Complainant,  having  been  first  duly 
sworn,  deposes  in  answer  to  interrogatories  by 
Complainant's  Counsel,  as  follows: 


Ql.  Please  state  your  name,  age,  residence  and 
occupation? 


A.  W  illiam  Kennedy  Laurie  Dickson,  Consult- 
ing  Engineer,  4  Denman  Street,  Piccadilly  Circus, 
London.  I  am  49  years  of  age. 

Q2.  Have  you  ever  known  personally  Mr.  Wood- 
ville  Latham? 

A.  Yes. 

Q3.  When  did  you  first  become  acquainted  with 
him? 

A.  In  the  early  part  of  1894.. 

Q4.  What  was  Mr.  Latham’s  business  or  occupa¬ 
tion  at  the  time  you  knew  him? 

A.  When  I  first  became  acquainted  with  him,  363 
he  was  interested  in  the  purchase  of  Edison  kineto- 
scopes  and  made  such  purchases  from  Mr.  Edison 
at  that  time.  It  was  in  my  province  to  exhibit  the 
machines  to  purchasers  and  so  I  became  acquaint¬ 
ed  with  that  gentleman  and  his  sons. 

Qo.  Was  Woodville  Latham  a  scientific  man? 

Mr.  Eyre:  Objected  to  as  irrelevant  and 
immaterial. 

A.  Yes.  . 

_  ever  have  any  other  business  rela¬ 

tions  with  Mr.  Latham  in  connection  with  moving  363 
picture  apparatus  other  than  that  which  you  have 
stated  in  a  preceding  answer?  and  if  so,  will  you 
please  state  fully  what  your  relations  with  Lira 

Mr.  Eyre:  Objected  to  as  it  appears  to 
bring  new  matter  into  the  case  which  is  not 
proper  rebuttal  testimony  and  notice  is 
given  that  at  the  proper  time  motion  will 
be  made  for  leave  to  take  testimony  in  reply 
to  this  or  any  similar  line  of  testi- 


[PHOTOCOPY] 


'William  K.  L.  Dickson. 


r 


William  K.  L.  Dickson. 


mony  or  to  expunge  the  same  from  the 
record,  and  it  is  agreed  that  this  objection . 
be  made  now  once  for  all  to  any  testimony 
of  this  character. 

A.  As  a  brief  preamble,  prior  to  answering  these 
questions  in  full,  X  would  like  to  say  that  a  few  days 
ago,  I  read  for  the  first  time  Mr.  Woodville 
Latham's  testimony  in  an  Interference  in  the 
Patent  Office  under  the  head  of  Woodville 
I.atham  vs.  Thomas  Armat  and  found  same  to  my 
intense  surprise,  incomprehensibly  vindictive. 
Had  I  known  of  this  testimouj',  nothing  would 
have  kept  me  from  coming  over  and  correcting  such 
statements,  as  I  hope  now  to  do,  hoping  that  this 
may  not  be  out  of  place. 

As  stated  before,  I  met  Mr.  Woodville  Latham 
for  the  first  time  in  the  early  part  of  (to  the  best 
of  my  knowledge)  1894,  when  he  came  to  the 
Edison  Laboratory  to  purchase  six  or  more  kineto- 
scopes  which  he  intended  to  use  for  exhibition 
purposes  in  New  York.  I  found  Mr.  Latham  to  be 
a  congenial  spirit,  owing  to  his  scientific  attain¬ 
ments  and  our  friendship  grew  and  throughout 
such  acquaintanceship,  we  spent  many  evenings  dis¬ 
cussing  the  scientific  questions  of  the  day.  One 
subject,  however,  was  rigidly  taboed,  namely,  mov¬ 
ing  photography.  Professor  Latham,  I  believe, 
was  a  man  of  letters,  Professor  at  a  Virginia 
College  or  University,  a  lecturer  in  Physics. 
Shortly  after  my  meeting  him  at  the  Edison 
Laboratory,  I  invited  him  to  my  home  and  to  cut 
this  testimony  as  short  as  possible,  I  will  now  give 
the  salient  points  that  I  presume  may  be  of  interest 
iu  this  testimony,  namely,  Mr.  Woodville  Latham, 
shortly  after  I  had  made  his  acquaintance,  asked 


me  to  recommend  him  a  good  mechanician  without 
stating  what  he  wished  him  for.  I  recommended  a 
late  employee  of  Mr.  Edison,  whom  I  knew  to  be  a 
thoroughly  capable  man  in  his  line.  A  week  or  so 
later,  Mr.  Latham  called  at  my  house,  thanked  me 
for  the  recommendation,  remarking,  that  he 
was  just  the  man  he  wanted,  and  then  for  the  first 
time,  disclosed  that  he  wished  to  carry  out  some 
idea  he  had  in  moving  photography.  This  rather 
took  me  aback  and  I  told  him  that  I  should  never 
have  recommended  anyone  to  him  had  I  known  for 
what  purpose  he  wished  to  use  this  mechanician.  36S 
However,  the  deed  was  done  and  there  was  nothing 
more  to  be  said.  Mr.  Woodville  Latham  then  did 
bis  best  to  persuade  me  to  come  and  join  forces 
with  them.  This  I  steadfastly  declined,  owing  to 
the  fact  that  my  position  and  interest  with  Mr. 
Edison  were  entirely  satisfactory  to  me,  and  that 
the  Latham  proposition  at  that  time  was  an  un¬ 
known  quantity.  Sometime  in  October,  1894,  Mr. 
Woodville  Latham  and  his  two  sons,  Messrs. 
Otway  and  Gray  Latham,  accepted  an  invitation 
to  dine  at  my  house,  at  106  Cleveland  Street, 
Orange,  N.  J.  and  after  the  guests  had  all  left,  Mr.  gqg 
Woodville  Latham  and  his  two  sons  made  a  propo¬ 
sition  to  me,  in  the  presence  of  my  wife,  which  was 
untenable,  which,  however,  was  modified  and  to 
which  I  agreed  heartily,  namely,  that,  as  Mr. 
Woodville  Latham  was  desirous  of  going  into 
public  exhibitions  of  the  kinetoscope,  using  same 
for  projecting  purposes,  if  on  trial,  it  proved  satis¬ 
factory,  I  should  use  my  best  endeavor  to  persuade 
Mr.  Edison  to  give  them  the  exclusive  right  for  this 
special  branch  of  the  business,  and  that  if  I  suc¬ 
ceeded,  I  should  have  a  substantial  interest,  subject 
Of  course,  to  Mr.  Edison’s  approval.  I  signed  such 


a  letter,  which  was  approved  of  by  my  wife,  whose 
sense  of  right  and  wrong  naturally  was  of  the 
highest  order. 

I  immediately  set  to  work  and  arranged  to  make 
a  trial  at  Columbia  College,  with  the  courtesy  and 
in  the  presence  of  the  Professors  and  one  or  two 
other  gentlemen,  Woodville  Latham  and  his  sons 
being  invited.  All  the  commercial  kinetoscopes, 
were  in  use  but  I  was  able  with  some  parts  of  an 
obsolete  machine,  to  demonstrate  and  prove  to  my 
own  satisfaction  and  that  of  Mr.  Latham,  and  the 
others  present,  that  if  I  succeeded  in  persuading 
Mr.  Edison  to  make  such  a  contract  as  previously 
stated,  regarding  the  use  of  the  Edison  film  and 
kinetoscopes,  possibly  with  slightly  increased  open¬ 
ing  in  the  shutter,  and  as  intensely  concentrated 
light  as  possible,  all  would  be  well.  The  short  film 
and  mechanism  were,  of  course,  replaced  in  Mr. 
Edison’s  laboratory  and  the  next  morning  X  did  my 
best  to  persuade  Mr.  Edison  to  grant  these  gentle¬ 
men  this  privilege.  Mr.  Edison,  however,  pointed 
out  to  me  that  he  had  already  bound  himself  to 
Messrs.  Bnff  &  Gammon.  I  need  not  say  that  my 
disappointment  was  intense  and  I  called  on  Mr. 
Woodville  Latham  to  acquaint  him  of  my  failure. 
It  was  then  I  learned  from  this  gentleman  that 
they  intended  therefore,  to  go  into  this  whole  busi¬ 
ness  themselves  and  that  he  was  going  to  carry  out 
some  ideas  he  had  and  construct  machines  to  pro¬ 
duce  negatives  and  positives  for  projecting  pur¬ 
poses.  It  is  stated  in  the  Woodville  Latham- 
Armat  testimony,  among  other  things,  that  I  was 
in  his  employ.  This  nonsensical,  and  for  some 
hidden  purpose,  vindictive  remark,  I  must  emphati¬ 
cally  deny,  and  while  I  have  the  opportunity,  wish 


to  state  that  at  no  time  was  X  ever  in  Mr.  Wood¬ 
ville  Latham’s  employ,  nor  gave  him  any  sugges¬ 
tion  or  ideas  in  connection  with  moving  photo¬ 
graphy.  I  note  in  thq  Woodville  Latham  testi¬ 
mony  that  there  is  a  mention  of  a  Dickson  Stop 
Mechanism  which  was  experimented  on  and  failed. 
The  truth  of  the  matter  was  simply  this:  That 
during  one  of  our  many  scientific  discussions,  he 
caught  me  napping  and  I  asked  him  if  he  had  seen 
a  curious  stopping  device  for  actuating  a  clock¬ 
work,  which  I  described  not  having  the  slightest 
intention  ait  the  time  that  he  should  use  this  for 
the  work  on  which  he  was  engaged.  I  was  careful 
not  to  ask  him  what  he  was  doing  or  what  his 
mechanism  was,  as  I  wished  my  relations  with  him 
to  remain  purely  social.  Mr.  Latham  seemed  to 
jump  at  the  conclusion  that  this  would  be  most 
useful.  I,  however,  pointed  out  to  him  I  fancied 
it  would  be  far  too  slow  for  his  purpose,  and  that 
I  certainly  did  not  wish  him  to  bring  me  into  this 
business  unless  I  decided  to  leave  Mr.  Edison  and 
join  them,  which  at  present  I  had  not  the  remotest 
idea  of  doing.  During  the  months  of  December, 
1804,  and  January,  1895,  I  had  several  opportuni¬ 
ties  of  visiting  on  invitation,  a  shop  which  they 
had  in  New  York  and  saw  that  they  were  in  full 
swing,  making  so-called  modified  kinetoscope  pro¬ 
jectors.  At  the  same  time,  they  were  working  on 
an  apparatus  for  taking  negatives.  I  particularly 
avoided  examining  same  and  cannot  testify  as  to 
the  construction  of  this  same  mentioned  taking 
machine  until  I  received  an  invitation  from  Mr. 
Woodville  Latham  to  come  over  as  quickly  as 
possible  as  he  had  something  particularly  interest¬ 
ing  to  show  me.  On  arriving  on  the  scene,  I  found 
Mr.  Otway  Latham,  Mr.  Gray  Latham,  Mr.  Eugene 


[PHOTOCOPY] 


Lauste  and  another  workman  very  much  excited 
and  they  proceeded  to  show  me  every  detail  ot  the 
before  mentioned  taking  machine.  A  short  piece 
of  film  was  tried  and  I  was  asked  to  develop  same 
which  I  did.  Mr.  Otway  Latham  for  some  hidden 
reason,  asked  me  to  write  a  note  dictating  the 
words  “To  my  friend  Woodville  Latham,  Compli¬ 
ments  of  W.  K.  L.  Dickson,”  etc.  If  his  object  was 
to  compromise  me,  he  very  nearly  did  succeed  and 
so  I  fell  into  the  trap,  for  as  previously  stated, 
throughout  all  these  proceedings,  neither  by  word 
7  or  action,  did  I  have  anything  to  do  with  their 
work.  After  this,  I  thought  it  best  to  have  as 
little  to.  do  with  them  as  possible,  until  I  had  made 
up  my  mind  if  I  should  join  them  or  not.  The 
crisis  came  on  April  2nd,  1895,  when  I  was  accused 
by  an  individual  then  in  the  employ  of  Mr.  Edison, 
to  the  effect  that  my  relations  with  Messrs.  Latham 
were  not  honorable,  etc.  etc.  That  person  had  the 
pleasure  of  being  confronted  with  Mr.  Edison  by 
me  and  asked  to  repeat  the  remarks  he  made  to 
me.  Mr.  Edison’s  remark  was,  “I  don’t  believe  a 
d—  word  of  it.”  I  then  insisted  on  Mr.  Edison 
>  making  his  choice  betu'een  the  aforementioned 
person  and  myself,  but  either  owing  to  Mr.  Edison 
having  contracted  with  this  person,  allotting  to 
him  full  power  or  whatever  it  was,  and  the  decision 
not  being  sufficiently  whole-hearted,  I  lost  my 
temper  and  resigned  on  the  spot.  The  date,  as 
previously  given,  was  April  2,  1895.  I  then  joined 
my  own  company,  the  Portable  Electric  Light  & 
Power  Company,  and  throughout  the  time  I  was 
engaged  in  this  company,  Messrs.  Latham  received 
from  me  occasional  visits  and  towards  May,  I  as¬ 
sisted  in  the  taking  of  a  glove  contest  on  the  roof  of 
Madison  Square  Garden. 


Before  closing  this  preamble,  I  might  add,  that 
I  notice  in  the  Latham  testimony,  that  a  certain 
amount  of  stock  in  the  Lambda  Company  was  given 
me.  This  is  quite  incorrect.  The  true  facts  of  the 
case  were  these.  Mr.  Woodville  Latham  insisted 
in  forcing  this  stock  on  me  and  which  I  as  persist¬ 
ently  refused,  there  being  no  quid’  pro  quo,  as  long 
as  I  was  engaged  with  Mr.  Edison  and  not  having 
done  anything  for  the  Latham  Company.  Until  I 
left,  I  could  not,  of  course,  take  something  for  noth¬ 
ing.  As  I  was  still  towards  the  last  undecided, 
if  I  should  join  them  or  not,  at  the  advice  of  my  3S0 
solicitor,  Mr.  Edmond  Congar  Brown,  of  New 
York,  I  sent  Mr.  Latham  to  him  and  learned  after 
that  Mr.  Brown  decided  in  my  interest  to  hold  such 
stock  in  trust,  pending  the  time  that  I  should  de¬ 
cide  to  join  them. 

In  conclusion,  to  this  rather  lengthy  preamble,  I 
am  fortunately  able,  even  although  I. learn  with 
much  regret,  that  the  Messrs.  Latham  have  passed 
on,  to  give  an  account  of  themselves  elsewhere,  that 
I  have  other  witnesses  who  can  substantiate  all  I 
have  said  in  regard  to  the  personal  slander  which 
I  need  not  say,  has  very  much  upset  me.  381 

.1  take  this  opportunity  of  apologizing,  at  the 
same  time  thanking  Counsel  on  both  sides,  for  their 
kind  indulgence. 

Counsel  for  defendant  states  that  he  is 
hardly  in  a  position  to  accept  the  thanks  of 
the  witness  as  he  feels  that  he  must  now  ob¬ 
ject  to  the  answer  as  being  incompetent,  as 
bringing  in  reference  to  testimony  which 
has  not  been  given  in  this  case  and  which 
cannot  be  duplicated  in  this  case,  since  it 


res: 

382  _ Wiliam  K.  L.  Dickson-. _ 

appears  that  Latliam,  whose  prior  testimony 
in  Interference  was  criticised,  is  dead.  The 
answer  is  further  objected  to  as  irrelevant 
and  immaterial. 

Becess. 

After  Becess. 

Q7.  You  state  in  your  last  answer  that  you  were 
employed  by  Mr.  Edison  in  1894  or  5.  In  what  de- 
3S3  pertinent  were  you  at  Mr.  Edison’s  place? 

A.  The  Electrical  Mining  or  Milling  Department 
and  the  Moving  Picture  Photographic  Department. 

QS.  How  much  experience  did  you  have  with  the 
apparatus  and  the  processes  practiced  in  the  Mov¬ 
ing  Picture  Department? 

A.  In  1SS7,  Mr.  Edison  ashed  me  if  I  under¬ 
stood  photography.  I  replied  I  did,  also  the  chem¬ 
istry  of  photography.  He  then  proposed  to  start  a 
department  in  which  I  was  to  have  exclusive 
charge  developing  liis  ideas  in  moving  photography, 
which  I  did  from  that  time  on  until  I  left  him. 
gsi  Q9.  And  you  left  him, ‘as  I  understand  it,  April 
2, 1895? 

A.  That  is  right. 

Q10.  You  have  also  referred  to  seeing  a  camera 
or  taking  machine  in  Woodville  Latham’s  shop. 
I  wish  you  would  now  state  in  as  much  detail  as 
you  can  the  exact  circumstances  connected  with 
the  incident,  giving  as  far  as  you  are  able,  the  dates 
when  you  first  saw  that  machine  sufficiently  to 
understand  its  construction? 

A.  I  received  a'  letter  of  invitation  from  Mr. 
Woodville  Latlmm  a  month  or  so  before  I  left  Mr. 
Edison  in  which  letter  Mr.  Woodville  Latham 


[PHOTOCOPY] 


129 

_ William  K.  L.  Dickson. _  355- 

urged  me  to  come  over  as  soon  as  possible  to  see 
what  they  had  accomplished,  I  found  those  present 
Mr.  Otway  Latham,  Mr.  Gray  Latham  and  Mr. 
Eugene  Lauste,  a  workman.  There  may  have  been 
others,  but  I  do  not  remember,  except  that  I  un¬ 
derstood  Mr.  Woodville  Latham  was  not  well  on 
that  evening,  as  I  recall.  In  the  centre  of  the  room 
or  shop  the  taking  machine,  which  I  was  aware 
had  been  worked  on  for  some  time  past,  was  ap¬ 
parently  finished,  judging  before  I  was  shown  the 
interior  by  the  general  excitement  of  those  present. 

-  f i  With  a  flourish  the  cover  was  lifted  displaying  an 

T  upright  mechanism  composed,  to  me  as  first  im- 

!  pression,  of  endless  rollers,  sprockets,  etc.  On  ex¬ 

amination  and  witnessing  the  run  made  by  Mr. 

I .  Eugene  Lauste,  Mr.  Otway  Latham  assisting  in 

threading  a  piece  of  (what  appeared  to  be) 

I  spoilt  film,  I  noticed  that  this  piece  of  film 

I  was  passed  over  a  sprocket  wheel,  the  film  being 

i  held  in  place  by  a  roller  pressing  against  the 

j  sprocket  wheel  holding  the  film  in  position.  Prom 

I  this  sprocket  a  loop  was  formed  and  passed  to  a 

second  sprocket,  the  film  being  similarly  held  in 
position  by  a  roller,  the  film  was  next  carried  387 
through  a  window  gate.  Below  the  window  gate 
•  the  film  was  passed  over  a  sprocket  wheel,  the  film 
held  in  position  by  another  roller.  From  this 
u  ^7  sprocket  wheel  the  film  formed  a  loop  and  was  plac- 

i  '  ed  over  a  fourth  sprocket  wheel  again  similarly 

!  held  by  a  roller.  I  noticed  that  next. to  the  lowest 

sprocket  wheel,  which  I  might  count  as  the  third 
sprocket  wheel,  was  rigidly  attached  to  a  Maltese 
cross  stopping  device  which  I  understood  at  the 
time  was  to  be  their  method  of  stopping  and  start¬ 
ing  the  film.  This  third  sprocket  wheel  was  fast- 


[PHOTOCOPY] 


130 

William  K.  L.  Dickson.. 


131 

William  K.  L.  Dickson. 


oned  in  some  way  with  the  second  sprocket  wheel 
immediately  above  the  gate  and  the  two  outside 
sprocket  wheels  1  and  4  were  similarly  attached. 
After  running  through  this  short  piece  of  black' 
appearing  film  the  box  was  taken  into  the  dark  room 
situated  at  the  end  of  the  shop,  and  Mr.  Otway 
Latham  and  one  other,  presumably  Mr.  Eugene 
Lauste,  threaded  the  machine  with  some  sensitive 
unexposed  film.  This  was  brought  out  of  the  dark 
room  and  the  question  arose  how  to  make  a  record 
on  this  film.  X  found,  however,  that  it  had  been 
settled  to  photograph  the  filament  of  an  incandes¬ 
cent  lamp  and  someone  present  suggested  swinging 
same  during  the  exposure.  I  was  asked  to  turn  the 
handle,  I  stupidly  did,  and  further  adding  to  my 
stupidity  by  not  being  able  to  see  through  their 
purpose,  developed  for  them  a  short  piece  of  the 
exposed  film  in  the  previously  mentioned  dark 
room,  tearing  off  a  piece  of  about  six  inches  long, 
the  result  being  a  sharply  focused  and  clearly  de¬ 
fined  image  of  the  carbon  filament  standing  out  in 
black  relief  against  a  more  or  less  mottled  back¬ 
ground.  Mr.  Otway  Latham  wished  his  father,  who 
was  ill  at  the  Bartholdi  Hotel,  to  have  that  night 
the  first  sample  and  asked  me  to  pin  this  to  a  piece 
of  paper,  he  himself  dictating  the  words  which  I 
remember  perfectly  to  be  “To  my  friend  Woodville 
Latham,  compliments  of  W.  K.  L.  Dickinson.”  I 
should  not  have  remembered  the  exact  date  and 
hour  of  this  note  had  not  my  memory  been  refresh¬ 
ed  by  reading  Mr.  Latham’s  testimony  but  I  am 
absolutely  certain  that  in  every  detail  this  event 
took  place  at  midnight  or  thereabouts  a  month  or 
more  prior  to  leaving  Mr.  Edison,  which  date  as  we 
know  was  April  2, 1893. 


Qll.  Where  was  the  shop  where  the  above  oc¬ 
currences  took  place? 

A.  I  can  only  remember  it  was  a  broken  down 
looking  place  in  Franklin  Street,  New  York,  the 
shop,  however,  seemed  to  be  well  equipped. 

Q12.  Will  you  describe  a  little  more  fully  the 
location  of  this  shop  which  you  say  was  on  Frank¬ 
lin  Street? 

A.  I  am  afraid  that  that  is  more  than  my  mem¬ 
ory  will  assist  me  in  at  this  late  date,  but  owing  to 
the  circumstances  connected  with  this  to  me  more 
or  less  disagreeable  business  the  name  of  Franklin 
Street  is  deeply  impressed  on  my  mind. 

Q13.  Was  this  in  New  York  City? 

A.  New  York  City,  yes. 

Q14.  Can  you  tell  where  that  street  was  located 
with  references  to  some  central  point  say  the  City 
Hall? 

A.  I  am  afraid  I  cannot.  It  certainly  was  in  the 
lower  portion  of  New  York.  • 

Qlo.  Mr.  Lauste  has  given  testimony  in  this  case. 
Were  you  present  at  the  time  that  he  gave  his  de¬ 
position?  . 

A.  X  was. 

Q16.  Lauste  says  that'  the  Latham  shop  was  on 
Frankfort  Street.  Was  he  mistaken  in  this? 

A.  Mr.  Lauste  was  quite  right.  It  was  certainly 
Frankfort,  now  that  the  matter  is  brought  to  me. 

Q17.  Did  you  in  writing  the  note  at  Mr.  Otway 
Latham’s  dictation  attach  any  date  to  it? 

A.  I  did,  both  date  and  hour. 

Q18.  Was  the  date  which  you  wrote  that  of  the 
day  on  which  the  experiment  was  tried? 

A.  Yes,  about  10  minutes  after  the  short  piece 
had  been  developed,  and  in  fact  the  piece  of  film 


[PHOTOCOPY] 


132 

394  _ Wiliam  K.  L,  Dickson. 

"•us  lying  on  a  piece  of  blotting  paper  at  our  side. 

Q19.  I  show  you  now  tbe  sketch  Mr.  Lauste  made 
at  the  time  of  giving  his  deposition  in  this  case  and 
which  is  in  evidence  as  Complainant’s  Exhibit 
Lauste  Sketch.  Will  you  please  state  in  what  re¬ 
spects,  if  any,  that  sketch  illustrates  the  construc¬ 
tion  of  the  feed  mechanism  of  the  camera  as  you 
saw  it  on  this  occasion  at  the  Frankfort  Street  shop 
to  which  you  have  just  testified? 

A.  The  sketch  I  hold  in  my  hand  is  undated  and 
395  pm'porting  t0  be  a  sketch  made  on  the  Hotel  Bre- 
voort  letter  head,  the  sketch  representing  a  scries 
of  rollers  and  sprocket  wheels  and  a  side  sketch  of 
a  Maltese-cross  stop  motion.  This  I  was  aware  had 
been  drawn  and  put  in  evidence  at  the  time  of 
Lauste’s  testimony.  The  sketch  appears  substan- 
tially  to  be  what  I  observed  at  the  time  but  I  do  not 
recollect  the  exact  mode  of  attaching  the  various 
sprocket  wheels  together  and  presume  this  was 
substantially  what  I  saw  with  the  exception  of  a 
roller  which  is  drawn  on  the  top  of  the  first 
sprocket  wheel.  This  I  did  not,  see  at  the  mid- 
.  night  test. 

39G  Q20.  Using  this  sketch  as  a  matter  of  conveni¬ 

ence,  will  you  please  state  how  the  first  and 
fourth,  that  is  the  upper  and  lower  sprocket  wheels 
in  the  taking  machine  as  you  saw  it  at  the  time  of 
the  midnight  experiment  were  driven;  that  is  to 
say,  was  their  motion  intermittent  or  continuous? 

A.  I  am  sorry  I  cannot  help  you  very  much  in  re¬ 
gard  to  this  for  I  do  not  remember  the  exact  method 
adopted  at  that  time  to  run  these  said  mentioned 
first  and  fourth  sprockets.  They  were,  however, 
working  in  unison  continuously,  not  intermittent¬ 
ly,  and  presumably  belted  or  geared  as  shown  in 
the  sketch,  which  is  quite  likely. 


William  K.  L.  Dickson. 


Q21.  I  did  not  mean  to  inquire  as  to  the  specific 
devices  for  driving  them,  but  only  as  to  the  charac¬ 
ter  of  their  motion,  and  as  to  this  your  answer  is 
■what? 

A.  That  the  first  and  fourth  sprockets  shown  in 
the  sketch  and  as  seen  by  me  at  that  time  were 
running  continuously  and  not  intermittently. 

Q22.  And  how  was  it  with  the  second  and  third, 
or  the  two  intermediate  sprockets,  what  was  the 
character  of  their  movements? 

A.  Intermittently  running  sprocket  wheels. 

Q23.  Did  you  make  any  estimate  at  the  time  of  393 
the  rate  at  which  you  operated  this  camera? 

A.  Yes,  and  in  fact  we  had  a  lively  discussion 
and  I  think  my  estimate  was  accepted,  as  being  per¬ 
haps  the  only  one  present  who  could  judge,  though 
roughly,  of  the  speed  at  which  the  picture,  was 
token,  which  I  estimated,  considering  how  the 
machine  was  geared,  to  be  about  half  the  speed  at 
which  we  ran  the  Edison  kinetograph,  which 
kinetograph  was  run  about  40  to  the  second. 

Q24.  As  to  the  conditions  of  operation  and  finish 
of  the  machine  on  the  night  in  question,  what  have 
you  to  say?  399 

A.  I  am  afraid  very  litle,  if  anything,  but  I 
never  saw  that  machine  again  for  some  time  after 
I  had  ieft  Mr.  Edison.  The  machine,  however,  ap¬ 
peared  to  be  constructed  on  two  uprights  with  the 
rollers  and  sprockets  one  above  the  other,  the  gate 
or  film  carrier  being  centralized  between  the  four 
rollers,  two  sprockets  above  and  two  below. 

Q25.  Was  the  machine  on  the  night  when  you 
first  operated  it  in  such  condition  that  it  could  be 
used  practically  for  the  talcing' of  moving  pictures? 

Objected  to  as  calling  for  a  mere  conclu¬ 
sion  and  indefinite. 


[PHOTOCOPY] 


134 

400  _ _ William  IC  L.  Dickson, 

A.  I  felt  convinced  and  somewhat  troubled  that 
we  had  a  serious  competitor  especially  so  on  exam¬ 
ining  the  consecutive  views  of  the  filament  swaying 
lamp.  I  examined  the  film  closely  with  a  lens  and 
found  perfect  definition,  and  except  for  a  slight 
halation  due  to  the  intensity  of  the  light  filament, 
but  I  considered  at  the  time  that  the  machine 
would  answer  the  purpose  for  which  it  was  intend- 
.  ed. 

Q2G.  You  have  spoken  of  assisting  in  photo- 
40!  graphing  a  glove  contest  on  the  roof  of  the  Madison 
Square  Garden.  Do  you  remember  the  names  of 
the  contestants  in  this  contest? 

A.  I  do.  Griffo  and  Barnet. 

027.  Do  you  remember  when  this  contest  took 
place? 

A.  Shortly  after  I  left  Mr.  Edison. 

Q28.  You  do  not  recall  the  precise  date'’ 

A.  I  do  not. 

Q29.  What  machine  did  you  use  for  taking  these 
pictures?  ’ 

A.  The  same  that  I  tested  on  the  lamp  filament. 
Q30.  You  mean  the  machine  you  first  used  at  the 
402  Frankfort  Street  shop? 

A.  Yes. 

Q31.  Was  the  machine  when  you  used  it  for 
photographing  the  Griffo  and  Barnet  fight  in  the 
same  condition  as  when  you  photographed  with 
it  the  swinging  incandescent  lamp  in  the  Frank¬ 
fort  Street  shop? 

A.  Yes,  but  with  the  exception  that  I  added,  or 
suggested  that  they  should  add,  a  supplementary 
roller  on  the  upper  sprocket  wheel.  The  effect  of 
this  roller,  I  judged,  would  be  to  allow  the  film  to 
have  a  'better  grip  on  the  teeth  of  the  sprocket 


135 

'  William  K.  L.  Did: son,  ,no 

wheel.  In  other  words,  I  made  this  suggestion  to 
obviate  any  possible  tearing  out  of  'the  perfora¬ 
tions,  as  they  were  intending  to  use  a  very  neavy 
film. 

Q32.  And  this  supplementary  roller  you  think 
was  in  the  machine  when  you  photographed  the 
Griffo  and  Barnet  fight? 

A.  Yes.  This  roller  I  judged  necessary  and  my 
suggestion  was  carried  out  a  day  or  two  before  the 
fight,  tested  and  proved  efficient. 

Q33.  You  heard  Lauste’s  testimony  on  this  point 
and  you  do  not  agree  with  his  recollection  of  it?  *04 
Objected  to  as  imporper,  the  witness 
should  simply  testify,  to  his  own  recollection 
without  reference  to  what  Lauste  may  have 
said. 

A.  I  recollect  his  testimony,  being  present,  ana 
would  have  corrected  it  at  the  time  but  naturally 
I  should  have  been  out  of  order.  The  roller  was 
placed  on  the  machine  a  day  or  two  before  the 
fight. 

Q34.  Do  you  recall  how  much  film  you  used  in 
photographing  the  Griffo-Barnet  fight.  405 

A.  Not  from  recollection  as  to  the  specific 
amount  used,  but  it  seemed  to  me  it  was  a  very 
large  and  heavy  roll,  sufficient  to  take  several 
rounds  or  bouts. 

Q35.  Approximately  how  long  was  that  film  if 
you  can  state? 

A.  I  am  unable  to  state  correctly  the  length  as 
I  did  not  measure  it,  but  remember  it  took  a  very 
long  time  to  reel  it  up  in  the  dark  room,  the  reel 
appearing  to  be  seven  or  eight  inches  or  perhaps 
more  in  diameter. 


Q3G.  How  did  the  width  of  film  used  in  this  ma¬ 
chine  compare  with  that  manufactured  by  Edison 
for  use  in  liis  kinetoscope? 

A.  It  was  considerably  wider  than  the  Edison 
kinetoscope  film. 

Q37.  Have  you  preserved  any  specimen  of  that 
film  and  if  so,  will  yon  please  produce  it? 

A.  I  have.  I  now  hand  you  a  film  which  I  found 
among  my  film  collection  in  London  purporting  to 
he  a  piece  of  film  of  the  Griffo-Barnet  fight  taken 
on  tlie  roof  of  Madison  Square;  size  without  per¬ 
forations  inch  and  a  half  by  three  quarters  of  an 
inch,  which  I  hand  in  evidence. 

Q3S.  That  is  to  say,  the  size  of  the  pictures  is  an 
inch  and  a  half  by  three  quarters  of  an  inch? 

A.  Yes. 

Q39.  Has  this  film  been  trimmed,  that  is  to  say 
the  edge  cut  off? 

A'.  Yes. 

Q40.  Did  it  originally  hare  perforations  on  each 
side?  > 


The  piece  of  film  produced  by  the  witness 
is  offered  in  evidence  and  marked  Complain¬ 
ant’s  Exhibit  Film  of  Griffo  and  Barnet 
fight. 

Q41.  Do.  you  know  what,  became  of  this  taking 
machine  after  it  was  used  for  photographing  this 
Griffo  and  Barnet  fight? 

A.  I  do  not.  As  I  left  very  shortly  after  the  tak¬ 
ing  of  this  picture,  not  being  satisfied  with  Messrs. 
Latham  methods  as  far  as  I  was  concerned,  join¬ 
ing  the  Mutoscope  and  Biograph  Company,  of 
which  I  became  a  member.  The  only  explanation 


[PHOTOCOPY] 


1ST 

_ William  K.  L,  Dickson. _ 

I  can  give  why  these  gentlemen  testified  later  in 
such  a  vindictive  manner  was  perhaps  due  to  my 
leaving  them  high  and  dry  and  joining  the  Bio¬ 
graph  Company. 

Q42.  Have  j’ou  had  any  experience  in  reading 
the  drawings  of  patents  illustrating  mechanical 
devices? 

A.  Yes. 

Q43.  Please  look  at  the  patent  to  Latham  which 
is  here  in  suit  and  Complainant’s  Exhibit  Latham 
Drawings  which  is  a  full  sized  reproduction  of  the 
original  drawing  of  that  patent,  and  consider  par-  410 
ticularly  Figs.  2  and  G  of  that  patent,  and  state, 
as  far  as  your  present  recollection  will  permit,  how 
the  taking  machine  which  you  used  to  photograph 
the  swinging  incandescent  light  in  the  Latham 
shop  on  Frankfort  Street,  and  afterwards  used  to 
photograph  the  Griffo  and  Barnet  fight,  differed 
from  or  resembled  the  machine  which  is  illustrated 
in  the  figures  to  which  I  have  called  your  attention? 

A.  Fig.  2  purports  to  be  a  projecting  kinetoscope. 

I  cannot  say  very  much  about  it  although  I  know 
they  were  working  on  something  of  this  order. 

Fig.  6  is  called  a  projecting  kinetoscope.  Fig.  G  411 
shows  practically  what  I  saw  at  that  date  as  far 
as  concerns  the  arrangement  of  sprockets  and  roll¬ 
ers  illustrating  an  upper  and  lower  loop,  but  this 
illustration  G  is  not  as  I  saw  it  at  that  time.  For 
some  reason  or  other  the  teeth  are  omitted  on  num¬ 
ber  55  and  the  film  did  not  pass  over  the  roller  set 
so  far  back  ns  5G.  This  evidently  was  drawn  some¬ 
time  after,  and  the  roller  56  which  I  devised  is 
taken  on  46,  answering,  however,  almost  the  same 
purpose.  In  the  machine  that  I  tested  at  the  time, 
the  film  came  straight  down.  I  notice  in  the 


sketch,  although  indicated,  the  stop  motion  is  not 
illustrated  except  in  Figure  5,  which  naturally  be¬ 
longs  to  this  apparatus  of  Fig.  6.  While  called  a 
projecting  kinetoscope  naturally  could  also  be 
called  a  taking  machine. 

Q44.  Do  you  know  what  became  of  that  taking 
machine  which  you  used  to  photograph  the  Grififo 
and  Barnet  fight? 

A.  I  haven’t  the  remotest  idea. 

Q45.  How  long  after  you  left  Mr.  Edison  April 
2,  1895,  were  you  associated  in  any  way  or  nego- 
413  tiating  with  Mr.  Latham  and  those  interested  with 
him? 

A.  I  do  not  remember  being  associated  with  the 
Lathams  even  after  leaving  Mr.  Edison,  except  in  a 
friendly  way  to  give  them  a  helping  hand  whenever 
I  could,  such  as  the  taking  of  the  Griffo-Barnet 
fight,  for  the  simple  reason  that  I  soon  became  dis¬ 
gusted  with  their  business  methods  as  previously 
stated  and  sought  other  fields.  ,  Had  they  behaved 
as  gentlemen  I  most  likely  should  have  thrown  my¬ 
self  heart  and  soul  into  the  work,  taken  up  the  stock 
held  in  trust  by  my  soliiitor  and  joined  them  in 
444  their  work.  It  is  fortunate,  however,  that  I  did 
not,  and  therefore  authorized  my  solicitor  to  re¬ 
turn  them  the  stock. 

Q46.  Did  you  ever  have  any  conversation  with 
Mr.  Woodville  Latham  after  you  left  Mr.  Edison 
on  the  subject  of  moving  picture  apparatus? 

A.  Yes. 

Q47.  What  did  you  find  as  to  the  extent  of  his 
information  on  this  subject? 

A.  I  found  him  to  be  well  conversant  with  the 
art  as  far  as  it  went  at  that  time  and  thought  he 
was  capable  of  originating  new  ideas  and  might 
arrive  at  some  good  work  outside  of  what  he  bad 


[PHOTOCOPY] 


139 

William  K.  L.  Dickson-.  _  4ig 

already  accomplished  and  even  then_  hesitated  if 
I  should  throw  in  my  lot  with  him;  his  person¬ 
ality  and  that  of  his  sons,  however,  knocked  that 
on  the  head. 

Answer  objected  to  as  incompetent  being 
merely  'the  opinion  of  the  witness  as  to 
possible  capacity  of  Latham  to  produce  hy¬ 
pothetical  results  at  some  time. 

Adjourned  to  Tuesday,  April  11,  1911,  at  11 
o’ciock  A.  M.  416 


New  York,  April  11,  1911,  11  A.  M. 

Met  pursuant  to  adjournment. 

Present:  Counsel  as  before. 

Examination  of  Mr.  Dickson  continued: 

Q48.  How  long  before  you  took  the  pictures  of  • 
the  swinging  incandescent  lamp  in  the  Frankfort 
Street  shop,  had  you  any  knowledge  of  the  camera 
used  on  that  occasion  and  what  was  the  extent  of  417 
that  knowledge? 

A.  I  am  afraid  I  cannot  be  of  very  much  use  in 
giving  you  any  description  or  exact  dates,  but  to 
the  best  of  my  knowledge  I  wns  aware  that  a 
taking  machine  was  in  process  of  construction 
shortly  after  Christmas,  or  to  be  absolutely  cer¬ 
tain,  we  might  say  during  the  early  part  of  Jan¬ 
uary,  1895. 

Q49.  How  did  you  Obtain  this  knowledge? 

A.  I  remember  calling  on  Mr.  Woodville  Latham 
at  the  shop  in  Frankfort  Street  about  that  time. 

y 


timeT  Did  3  °U  Sl!e  thiS  macllille  in  the  shop  at  that 

A.  I  did,  and  Mr.  Lanste  was  busy  with  same,  i 
could  not,  of  course,  nor  did  I  feel  it  right  to  ex- 
amine  any  of  the  work,  as  long  as  I  was  not  con¬ 
nected  with  them. 

Q51.  What  kind  of  a  man  was  Professor  Wood- 
,  e  Latham?  Please  tell  ns  anything  that  you 
know  about  the  character  of  his  attainments,  in¬ 
genuity  or  the  like,  that  yon  may  hare  observed 
lg  during  your  acquaintance  with  him? 

Objected  to  as  incompetent.  The  making 
of  a  specific  invention  cannot  be  proved  by 
evidence  as  to  character  and  attainments.  ' 

A.  I  found  in  Mr.  Woodville  Latham  a  congenial 
spirit  as  stated  before,  in  os  far  as  scientific  at¬ 
tainments  were  concerned.  Our  discussions  were 
mostly  based  on  general  physics  and  what  be  him¬ 
self  had  accomplished  in  his  life  in  regard  to  what 
lie  termed  “inventions”  and  various  ideas  he  had. 
He  spoke  of  different  apparatus  that  be  had  in- 
0  vented,  but,  of  course,  I  do  not  know  if  there  were 
any  patents.  It  struck  me  that  he  was  highly 
theoretical  and  his  anxiety  was  that  I  should  join 
forces  with  him  in  this  particular  work  he  was 
then  engaged  on.  This,  of  course,  being  out  of  the 
question,  other  subjects  were  more  fully  discussed 
and  I  must  say  I  was  mncli  impressed,  being  per¬ 
haps  a  little  younger  at  that  time,  with  the 
amount  of  information  he  had  acquired. 

Q52.  Have  you  known  Eugene  Lauste  for  a  long 
time?  ° 

A.  Yes. 

Q53.  When  did  you  first  know  him? 


[PHOTOCOPY] 


141 

_ William  E.  L.  Dickson.  _ 

A.  Eugene  Lauste  worked  at  Mr.  Edison’s  lab¬ 
oratory  for  several  years  as  mechanician,  engaged 
in  work  of  precision  such  as  electrical  apparatus 
for  Mr.  Edison  and  then  left,  seeking  employment 
at  the  Edison  Ore  Milling  Works  at.Odgen,  New 
Jersey,  which  he  found  distasteful  and  remained 
out  of  employment  some  time.  It  was  at  that  time 
that  I  recommended  him  as  a  skilled  mechanic  to 
Mr.  Woodville  Latham,  he,  Mr.  Woodville  Latham, 
not  disclosing  to  me  what  he  wished  this  mechanic 
to  do  for  him,  as  already  stated. 

Q54.  Do  you  know  whether  Lauste,  at  the  time 
he  entered  Mr.  Woodville  Latham’s  employ,  had 
had  any  practical  experience  with  moving  picture 
apparatus? 

A.  None  whatever.  In  fact,  no  one  was  per¬ 
mitted  to  come  within  the  sanctum  sanctorum  of 
the  moving  picture  department.  I  notice  that  in 
Mr.  Lauste’s  testimony  he  states  that  he  did  see  the 
exterior  of  a  kinetoscope  and  I  remember  the  cir¬ 
cumstance  very  well.  I  issued  a  general  invita¬ 
tion  to  everyone  in  the  laboratory  to. view  n  scene, 
perhaps  one  of  the  first,  if  not  the  first,  in  a  rough 
box-cabinet  shaped  kinetoscope,  the  subject  being 
“horseshoeing.” 

Qoo.  Did  you  ever  impart  to  Mr.  Latham  direct¬ 
ly  or  through  any  other  source  any  of  the  features 
of  construction  which  you  found  embodied  in  his 
camera  when  you  examined  the  same  at  the  Frank¬ 
fort  Street  shop  on  the  occasion  of  photographing 
the  swinging  incandescent  lamp? 

A.  Decidedly  and  emphatically,  no,  neither  by 
word  or  action. 

Q56.  Prior  to  tlie  night  when  you  photographed 
this  swinging  incandescent  lamp  at  the  Frankfort 
Street  shop,  had  Mr.  Latham  ever  expressed  to  you 


any  satisfaction  or  dissatisfaction  with  Lauste': 
work  for  him? 

A.  He  expressed  himself  as  being  very  well  satis 
fled  with  Mr.  Lauste  and  stated  that  the  work  was 
going  on  beautifully,  or  something  to  that  effect. 

Q57.  What  nationality  is  Lauste? 

A.  French  born,  a  Parisian. 

Q58.  Does  be  speak  English  fluently? 


425 


Mr.  Eyre:  Objected  to  as  incompetent, 
and  as  not  the  best  evidence. 

A.  No,  in  fact,  it  has  always  been  a  surprise  to 
me  why  the  English  language  was  so  difficult.  The 
only  explanation  I  can  give  is  that  his  bump  of 
languages  must  be  represented  by  a  cavity. 

Q59.  Did  Mr.  Latham  ever  give  you  any  intima¬ 
tion  of  whether  Lauste  was  carrying  out  his, 
Latham’s,  ideas  in  the  work  that  he  was  doing  for 
him? 


Mr.  Eyre :  Objected  to  as  secondary  evi¬ 
dence. 

A.  Yes,  he  seemed  to  be  always  very  pleased  and 
thought  that  Mr.  Lauste  was  a  most  capable  mech¬ 
anician  and  just  the  manjie  wanted  (to  quote  liis 
own  words)  to  carry  out  liis  ideas. 

Direct-examination  closed. 

Mr.  Eyre :  In  view  of  the  fact  that  the 
only  apparent  purpose  for  the  testimony  of 
this  witness,  and  certainly  the  main  purpose 
of  his  testimony  is,  to  make  an  attempt  to 
prove  some  early  date  of  alleged  invention 


[PHOTOCOPY] 


by  Latham  and  in  view  of  the  further  fact 
that  the  only  testimony  thus  far  adduced  by 
the  complainant,  relating  to  the  camera  for 
taking  machine  to  which  the  witness  has  re¬ 
ferred,  has  been  testimony  to  the  effect  that 
the  alleged  invention  was  made  by  Lauste 
and  not  by  Latham,  the  right  is  reserved  to 
call  for  the  production  of  the.  witness  for 
additional  cross-examination  in  case 
further  testimony  should  be  offered  tending 
to  show  the  malting  of  the  alleged  invention 
by  Latham  specially  if  it  tends  to  show  any  428 
disclosure  of  the  invention  by  Latham  to 
this  witness;  and  the  testimony  of  this  wit¬ 
ness  is  objected  to  as  irrelevant  and  imma¬ 
terial  unless  such  further  testimony  be  ad¬ 
duced. 

Counsel  for  Complainant  replies  that  he 
perceives  neither  the  point  nor  propriety  of 
the  above  objections  and  states  that  all  of 
the  facts  and  knowledge  in  his  possession 
with  regard  to  the  invention  .of  the  patent 
in  suit  by  Latham  is  now  in  the  posses¬ 
sion  of  counsel  for  defendant,  counsel 
for  defendant  having  yesterday  stated  4  9 
that  he  had  in  his  possession  a  copy 
of  the  Interference  proceedings  in  the 
case  of  Latham  vs.  Armat.  Counsel 
further  states  that  Woodville  Latham,  his 
two  sons,  Otway  and  Gray  Latham  are  dead 
and  this  fact  will  be  duly  proved.  If  there 
are  any  other  living  witnesses  capable  of 
.  testifying  with  regard  to  the  making  of  this 
invention  by  Latham,  Counsel  for  Com¬ 
plainant  has  no  knowledge  of  their  where¬ 
abouts,  although  a  most  diligent  search  has 


[PHOTOCOPY] 


144 


William  K.  L.  Dickson. 


145 

William  K.  L.  Dickson-. _ _  433 


been  made  to  ascertain  if  there  be  any  sncli 
witnesses.  Having  all  the  facts  before  him 
which  counsel  for  Complainant  knows  of  or 
believes  to  be  pertinent,  counsel  for  Defend¬ 
ant  is  at  liberty  to  proceed  in  the  usual 
course  followed  in  such  cases. 

Cross-examination  de  bene  esse : 

XQGO.  In  giving  the  date,  April  2nd,  1895,  as 
the  date  when  you  left  Edison,  are  you  basing  your 
,  431  statement  upon  your  personal  recollection? 

A.  No. 

XQG1.  What  are  you  basing  it  on? 

A.  I  have  a  copy  in  my  possession  of  my  resig¬ 
nation  to  Thomas  A.  Edison,  witnessed  by  my  fore¬ 
man,  who  was  present  at  the  time,  the  document 
reading  in  the  usual  form,  dated  April  2nd,  1895, 
and  witnessed;  which  document  I  can  show,  on 
demand. 

XQG2.  Did  your  resignation  take  effect  at  once? 

A.  At  once,  although  I  had  one  or  two  inter¬ 
views  unofficially  with  Mr.  Edison  within  the  next 
432  day  or  two>  111  order  to  clear  things  up  which  I 
stated  before  was  done  to  my  and  Mr.  Edison’s 
entire  satisfaction. 

XQG3.  You  moved  your  belongings  from  the 
Edison  Laboratory  that  same  day? 

A.  Oh,  no. 

XQG4.  How  long  after? 

A.  There  was  no  desperate  hurry  and  my  belong¬ 
ings  were  few,  if  any,  with  the  exception  of  a  few 
personal  photographs  that  I  had  taken  of  my  wife, 
sister,  niece,  dog,  I  forget  if  there  was  a  cat  pic¬ 
ture  ;  otherwise,  I  do  not  think  there  was  anything 
else.  These  wore  removed  within  the  next  day  or 


two,  to  my  house,  at  16G  Cleveland  Street,  Orange, 

New  Jersey. 

XQ65.  Did  you  go  to  the  Edison  Laboratory  at 
at  all  after  the  first  week  of  April,  1895? 

A.  No,  but  to  Mr.  Edison’s  house  on  one  occa- 

XQGG.  After  April  2nd,  1S95,  what  occupation, 
did  you  engage  in  and  when  did  you  begin? 

A.  I  joined  a  small  company  which  I  formed 
with  Mr.  Llewellyn  H.  Johnson,  which  we  termed 
the  Portable  Electric  Light  &  Power  Company.  ' 
XQG7.  When  was  that  company  first  formed?  434 
A.  It  was  more  in  the  order  of  a  partnership  be¬ 
tween  that  gentleman  and  myself,  he,  the  financier, 

I,  the  technical  adviser.  This  I  acquainted  Mr. 
Edison  with,  and  hoped  even  then,  if  needed,  would 
have  his  support.  About  that  time  however,  I  met 
my  old  friend  of  early  Edisonian  days,  Mr.  H.  N. 
Marvin,  and  being  thoroughly  disgusted  with  the 
business  methods  of  the  Lathams,  after  taking  the 
Griffo-Barnet  fight  I  threw  up  both  the  matters  and 
joined  Mr.  Marvin  in  a  new  moving  .photographic 
venture.  This  took  place,  to  the  best  of  my  recol¬ 
lection,  about  two  months  after  I  left  Mr.  Edison.  435 
Begarding  the  Portable  Electric  Light  &  Power 
Company,  so-called,  we  were  more  or  less  depend¬ 
ent  upon  the  Chloride  Accumulator  Company  for 
a  specific  kind  of  plate,  which  I  had  designed. 

Mr.  Gibbs,  the  General  Manager,  came  to  my  house, 
at  Orange,  New  Jersey,  and  that  of  Mr.  Johnson,  to 
arrange  for  these  plates  and  general  contracts.  Mr. 
Johnson  was  then  allowed  to  carry  this  on,  if  he 
chose,  when  I  joined,  as  stated  before,  Mr.  H.  N. 
Marvin,  and  his  associates. 

XQ68.  My  question  was  only  as  to  when  the 


Portable  Electric  Light  &  Power  Company  was 
formed,  and  I  do  not  think  you  have  told  me  yet. 

A.  I  did  state  that  it  was  a  partnership  more 
than  a  company,  but  for  convenience  sake,  we 
called  ourselves  a  company. 

XQG9.  Well,  that  docs  not  tell  me  when  the 
partnership  which  for  convenience,  was  called  a 
company,  was  formed? 

A.  I  don’t  know  that  I  can  give  any  exact  date. 
It  was  certainly  within  a  week  or  ten  days  of  my 
leaving  Mr.  Edison  that  Mr.  Johnson  and  I  ar¬ 
ranged  this  so-called  Company. 

XQ70.  Before  or  after? 

A.  After. 

XQ71.  What,  if  you  know,  has  become  of  Mr. 
Johnson? 

A.  I  haven’t  the  remotest  idea. 

XQ72.  What  was  the  last  that  you  know? 

A.  Sometime  in  that  same  year,  1895. 

XQ73.  What  was  his  then  location  and  occupa¬ 
tion? 

A.  Mr .  Llewellyn  H.  Johnson  lived  in  East 
Orange  and  was  connected  with  tiie  Bicycle  Heli¬ 
cal  Tube  Company.  v 

XQ74.  What  did  you  and  Mr.  Johnson,  using 
this  company  name,  intend  to  do? 

A.  Portable  storage  battery  lamps  for  mining 
purposes  and  general  portable  use  under  a  patent 
which  I  took  out  at  that  time  for  a  parabolic  re¬ 
flector  and  current  controlling  device. 

XQ75.  That  was  the  only  business  you  had  in 
mind  for  your  partnership? 

A.  That  was  the  only  business  we  had  in  mind. 

XQ7G.  Just  what  did  the  business  methods  of 
the  Lathams  have  to  do  with  your  deciding  to  give 
up  this  partnership  venture  with  Mr.  Johnson? 


147 

William  K.  h.  Dick  non. _ _ 

A.  Neither  the  business  methods,  so-called,  of 
the  Lathams  nor  my  relations  with  Mr.  Johnson 
had  anything  to  do  with  my  decision  to- join  an  old 
and  trusted  friend,  namely,  Mr.  H.  N.  Marvin.  I 
found,  as  stated  before,  with  regard  to  the  John- 
son-Diekson  combination,  that  ns  we  depended  al¬ 
most  entirely  on  very  light  plates  for  portable 
purposes  to  work  in  conjunction  with  my  patent 
lamp,  we  were  disappointed  that  Mr.  Gibbs  could 
not  produce  a  sufficiently  light  plate  to  give  us  the 
capacity  required  so  we  were  forced  to  abandon 
that  particular  plate  and  look  elsewhere.  This  took  440 
some  time  and  we  allowed  the  matter  to  drop  pro 
tem,  until  such  time  as  we  could  find  a  light  plate. 
Meanwhile,  I  made  several  of  these  lamps  which 
were  used  with  the  heavier  battery  provided  by  the 
Chloride  Accumulator  Company.  As  for  the  Lath¬ 
ams,  I  gave  them  such  help  as  I  deemed  necessary, 
such  as  taking  the  same  old  picture,  recited  several 
times  in  this  evidence  and  as  I  got  to.  know  them 
better,  it  was  quite  clear  to  me  that  further  asso¬ 
ciation  with  them  would  be  distasteful.  Mr.  Mar¬ 
vin  and  Mr.  Edmond  Congar  Brown,  my  solicitor, 
were  my  business  confidants  and  they  agreed  with  ^ 
me  not  to  go  too  fast,  as  far  as  binding  myself  to 
the  said  Lathams,  and  as  stated  before,  I  joined 
Mr.  Marvin  as  a  certainty  and  I  have  had  nothing 
to  regret  since  that  decision.  What  has  been  done 
with  my  patent  lamp,  I  do  not  know,  I  do  not  care. 

XQ77.  You  have  stated  (answer  to  XQG7) 
“About  that  time,  however,  I  met  my  old  friend 
of  early  Edisonian  days,  Mr.  H.  N.  Marvin,  and 
being  thoroughly  disgusted  with  the  business 
methods  of  the  Lathams ,  after  taking  the  Griffo- 
Barnet  fight,  I  threw  up  both  the  matters  and  join, 
ed  Mr.  Marvin  in  a  new  moving  photographic  ven- 


[PHOTOCOPY] 


442 


William  K.  L.  Dickson. 


n  your  last  answer  tlmt  this 
it  entirely  correct  or  as  you 


ture.”  I  judge  fron 
quoted  statement  is  » 

'Timust  confess  I  do  not  quite  see  what  you 
are  driving  at.  I  certainly  preferred  to  deal  with 
a  remunerative  and  agreeable  business  and  the  of¬ 
fer  was  such  that  X  considered  at  the  time  it  was 
best  for  me  to  accept  Mr.  Marvin's  offer. 

XQ7S.  How  long  did  you  continue  associated 
with  Mr.  Marvin’s  Company? 

,  A.  Until  the  present  date.  The  association  still 

413  continues,  under  the  heading  of  K.  M.  C.  D.  Syn- 

d  XQ79.  What  relation,  if  any,  has  that  company 
with  the  Biograph  company  or  the  same  company 

or  predecessors  under  different  names? 

A.  There  was  naturally  no  name  given  just  at- 
that  time  hut  shortly  after  we  met  together  with 
two  other  friends  of  Mr.  Marvin  in  Canastota,  >-eu 
York  to  dub  the  syndicate,  K.  M.  C.  D.  Again 
shortly  after  the  Mntoseope  Company  was  formed, 
followed  by  the  title  The  Mntoseope  &  Biograph 
Company.  > 

XQSO.  And  what  is  the  present  name  of  the  con¬ 
cern  with  which  you  are  connected? 

A.  To  be  more  explicit,  the  It.  M.  C.  D.  was  the 
parent  syndicate  in  which  we  had  our  various  in¬ 
terests  allotted.  All  other  companies  throughout 
the  world,  under  the  head  primarily  of  the  Muto- 
scope  Companies  and  later  of  the  Mntoseope  &  Bio- 
graph  Companies  were  owned  or  controlled  by  the 
parent  K.  M.  C.  D.  syndicate. 

Kecess. 

XQ81.  When  you  say  that  the  Portable  Electric 
T.irrht  &  Power  Company  was  more  of  a  pnrtner- 


r 


119 


;  f 


p 

r 


i 


William  K.  L.  Dickson.  _  445 

ship  than  a  Company,  do  you  mean  that  there 
were  no  company  organization  papers  filed? 

A.  To  the  best  of  my  knowledge,  that  is  right. 
Nothing  was  filed. 

XQ82.  What,  if  anything,  occurred'  after  No¬ 
vember,  1894,  and  prior  to  the  time  that  you  saw 
the  pictures  of  the  swinging  incandescent  lamp  af¬ 
fecting  the  character  of  your  relations,  either  with 
Mr.  Edison  or  with  the  Lathams? 

A.  There  was  nothing  that  could  have  affected 
either  my  relations  with  Mr.  Edison  or  with  the 
Lathams,  if  looked  at  in  the  proper  light.  41  ’ 

XQ83.  Did  anything  occur  during  that  interval 
which  made  you  feel  any  differently  as  to  your 
duties  or  loyalty  in  connection  with  Mr.  Edison? 

A.  Nothing.- 

XQ84.  X  have  understood  from  your  testimony 
that  while  you  were  at  the  Latham  shop,  at  times 
prior  to  the  swinging  light  episode,  you  were  care¬ 
ful  in  view  of  your  connection  with  Mr.  Edison,  to 
avoid  learning  the  details  of  what  was  being  done 
in  the  Latham  shop,  but  that  at  the  -time  of  the 
swinging  light  episode,  you  permitted  all  details 
of  the  camera  to  be  shown  and  explained  to  you.  447 
If  I  have  stated  correctly,  will  you  please  explain 
why  you  were  willing  to  examine  this  camera,  etc. 
on  the  later  occasion  and  not  willing  to  learn  what 
was  going  on  on  earlier  occasions? 

A.  You  have  stated  this  quite  correctly  and  the 
simple  explanation  is  that  the  showing  of  the  com¬ 
plete  camera  was  forced1  on  me  and  it  was  then-  or 
about  that  time  that  I  was  trying  to  make  up  my 
mind  if  I  should  go  into  the  exhibition  business  or 
not.  For  that  reason,  I  thought  it  wise  to  see  what 
they  had. 

XQ85.  Have  you  retained  in  your  possession  the 


[PHOTOCOPY] 


A.  No,  I  have  not. 

XQ8G.  Did  you  destroy  it  and  if  so,  when. 

A.  When  I  removed  to  England  from  my  home 
in  Orange,  there  was  a  general  clean-up,  of  course, 
and  presume  all  useless  stuff  was  destroyed. 

XQ87.  Do  you  believe  it  was  destroyed  then? 

XQSS  How  long  had  you  had  it  in  mind  before 
the  time  that  you  saw  the  swinging  incandescent 
4(19  lamp  photographed  that  you  might  go  into  the  ex- 
hibition  business? 

A.  As  explained  some  time  back,  it  was  my  in- 
tention  with  Mr.  Edison’s  approval,  to  go  into  or 
participate  in  the  exhibition  business,  Edison 
manufacturing,  Latham  to  have  the  right.  This,  as 
explained  previously,  could  not  be  granted,  owing 
to  a  contract  Mr.  Edison  had  made  with  Messrs. 
Kaff  &  Gammon;  after  that  I  was  quite  undecided 
what  to  do.  I  did  not  enter  into  any  agreement 
with  the  Lathams.  . 

XQ89  At  the  time  of  the  swinging  lamp  episode, 
,.n  you  knew  that  if  you  should  connect  yourself  with 
the  Lathams,  it  would  be  as  a  competitor  to  Edi- 


might  connect  yourself  with  the  Lathams,  were 
you  not? 

A.  Yes,  though  very  doubtful. 

XQ91.  When  you  say,  that  because  you  were  at 
that  time  trying  to  make  up  your  mind  whether  or 
not  you  should  go  into  the  exhibition  business,  you 
therefore  thought  it  wise  to  see  what  the  Lathams 
had,  you  mean,  do  you  not,  that  you  were  trying  to 


make  up  your  mind  whether  to  go  into  the  business 
with  them? 

A.  Yes. 

XQ92.  How  long  had  you  been  considering  go¬ 
ing  into  the  business  with  the  Lathams  as  com¬ 
petitors  to  Mr.  Edison? 

A.  Hard  to  tell.  Off  and  on,  X  suppose,  for 
some  months. 

XQ93.  Probably  as  early  as  the  time  that  Mr. 
Edison  declined  to  make  any  arrangement  with  the 
Lathams? 

A.  No.  < 

XQ94.  How  many  visits  did  you  pay  to  the  Lath¬ 
ams’  shop  prior  to  the  swinging  light  episode? 

A.  Difficult  to  say. 

XQ95.  For  what  purpose  did  you  make  these 
visits? 

A.  My  visits  to  Mr.  Woodville  Latham  at  the 
shop  or  at  the  Bartholdi  Hotel  or  Mr.  Woodville 
Latham’s  visit  to  my  house  were  more  or  less  so¬ 
cial.  In  these  visits  the  constant  refrain  was 
“Come  with  us,  work  with  us.  I  will  make  your 
fortune.”  If  the  question  is  leading  to,  if  I  gave 
any  instructions  or  was  connected  with  them  in  . 
any  way  as  to  giving  ideas  or  assisting  them,  this 
may  be  dismissed  once  and  for  all,  this  not  being 
the  case. 

XQ96.  This  constant  refrain  of  the  Lathams  as 
to  your  coming  with  them  related  to  moving  pic¬ 
ture  business  all  through,  did  it  not? 

A.  It  did. 

XQ97.  After  your  first  talk  with  Mr.  Edison, 
suggesting  a  possible  arrangement  with  the  Lath¬ 


ams,  when  did  you  next  talk  with  Mr.  Edison 
about  what  the  Lathams  were  doing? 


A.  There  was  no  talk  with  Mr.  Edison  after  that, 
for  quite  some  time.  .  ... 

XQ9S.  “For  quite  some  time”  is  very  indeflmtc. 
Give  me  the  best  idea  you  can  as  to  ',owlo"Slt"ns- 
A.  Possibly  about  two  mouths  or  so  before  I  left, 
in  which  I  told  him  that  we  might  have  a  competi¬ 
tor  in  the  Lathams.  I  think  Mr.  Edison  s  answer 
was  a  shrug  of  the  shoulders. 

XQ90.  Prior  to  April  2nd,  1S95,  did  you  tell  Mr. 
Edison  anything  as  to  the  camera  you  had  seen  and 
the  picture  of  the  swinging  light? 

A.  No,  decidedly  not. 

XO100.  When  the  Lathams  forced  you  to  look 
at*  this  camera,  they  knew  yon  were  working  for 
Edison.  Did  they  ask  you  to  promise  to  keep  the 
information  secret? 

XQ101.  Who  was  the  individual  who  accused 
yon  to  Mr.  Edison  of  having  had  dishonorable  re¬ 
lations  with  the  Lathams? 

A  W.  E.  Gilmore.  _ 

XQ102.  What  was  it  that  he  said  to  Mr.  Edison 
about  you,  so  far  as  you  knoy? 

A  I  do  not  know,  except  that  I  had  some  iela- 
“B  tion  with  them,  inferring  that  there  was  something 
incorrect  in  those  relations. 

XQ103.  Why  didn’t  you  tell  Mr.  Edison  what 

you  had  seen  at  the  Lathams’ shop? 

A  Had  I  done  so,  I  think  it  would  have  been 
incorrect.  X  could  only  say,  as  X  did,  as  stated 
previously,  that  we  may  have  in  these  people  a 
competitor.  .  .. 

XQ104.  Wasn’t  it  at  least  a  reason  for  not  tell¬ 
ing  him  the  fact  that  you  were  then  thinking  you 
might  join  the  Lathams  and  it  would  be  to  your 
interest  if  such  event  occurred,  not  to  have  Edison 


_ 'William  1C,  L,  DicJcson. _ _ 

know  what  had  been  done  in  the  Lathams’  shop 
any  sooner  than  possible? 

A.  There  is  a  good  deal  of  truth  in  what  you  say 
but  the  thought  of  joining  did  not  occur  until  some 
«tiwe  after.  I  commenced  to  realize  on-  the  night  of 
the  lamp  test  when  I  was  invited  to  see  that  they 
were  seriously  engaged,  that  I  might  join  in  the 
exhibition  branch  of  the  business  w-hich  had  been 
lost  sight  of  by  Edison  in  putting  out  the  kine- 
toscopes. 

XQ105.  Do  you  mean  by  your  last  answer  that  it 
was  some  time  after  the  night  of  the  swinging  light  458 
test  that  you  first  thought  of  joining  the  Lathams? 

A.  It  was  on  the  night  of  the  test. 

XQ10G.  It  was  on  the  night  of  the  test  that  you 
first  thought  of  joining  the  Lathams. 

A.  I  first  seriously  thought  of  joining  the 
Lathams. 


XQ107.  But,  you  had  been  thinking  of  joining 
them  for  several  months— perhaps  less  seriously- 
had  you  not? 

A.  No,  I  cannot  say  that,  if  at  all,  feebly. 

XQ10S.  Your  visits  to  the  Latham  shop  were 
generally  in  the  evening,  were  they  not? 

A.  Naturally.  • 

XQ109.  When  you  visited  the  shop,  did  you  fre¬ 
quently  talk  to  Lauste  in  French? 

A.  Occasionally,  of  course. 

XQ110.  How  large  a  shop  was  it? 

A.  Not  very  large. 

XQ111.  Well,  give  me  the  best  idea  you  can. 

A.  I  have  very  little  recollection  of  the  size,  pos- 
sibly  about  12x15,  or  maybe  more. 

XQ112.  Was  it  all  one  room? 


A.  There  was  a  small  dark  room  at  one  end. 
XQ113.  But  there  was  no  separate  office? 


A.  Yes,  there  was  a  sleeping  room,  it  I  remember 
right  which  answered  the  purpose  of,  I  presume, 
office,  dining  room  and  bedroom. 

XQ114.  That  was  where  Lauste  slept,  wasn’t  it? 

A.  I  believe  so. 

XQ115.  What  was  the  name  of  the  street  that 
was  deeply  impressed  upon  your  mind? 

A.  Franklin  or  Frankfort. 

XQ116.  You  are  not  sure  which,  are  you? 

A.  Yes,  quite  sure,  since  I  was  reminded.  It  was 
not  Franklin  but  Frankfort. 

XQ117.  What  were  the  business  actions  of  the 
Lathams  that  made  you  find  it  impossible  or  un¬ 
desirable  to  make  any  definite  connection  with 
them? 

A.  In  deference  to  the  death  of  all  three  parties 
concerned,  namely,  Mr.  Woodville  Latham  and  his 
sons,  Gray  Latham  and  Otway  Latham,  I  do  not 
think  it  would  be  necessary,  if  you  can  do  without 
the  answer,  to  push  this  question  further. 

XQ118.  I  am  sorry,  but  under  the  circumstances 
of  the  case,  I  do  not  feel  like  yielding  to  the  rea¬ 
sons  you  give  and  mustmsk  you  to  answer  the  ques- 
2  tion. 

A.  My  idea  that  morals  and  business  should  go 
hand  in  hand  decided  me,  and  as  these  gentlemen 
were  not  leading  the  sort  of  life  that  I  was  brought 
up  to  believe  in,  it  made  me  feel  that  the  less  I  had 
to  do  with  them,  the  better. 

XQ119.  Do  I  understand  that  your  last  answer 
has  relation  rather  to  the  personal  morals  of  the 
Lathams  than  to  the  business  actions  about  which  I 
asked? 

A.  I  do. 

XQ120.  Please  understand  that  I  have  not  the 


463 


_ William  K.  L.  Dickson, _ 

slightest  desire  to  drag  into  this  ense  the  personal 
morals  of  anyone  and  have  not  asked  you  that.  In 
your  answer  to  Q45,  you  said,  that  you  “soon  be¬ 
came  disgusted  with  their  business  methods.” 
What  business  methods  were  there  that  you  be¬ 
came  disgusted  with? 

A.  Nothing  definite  or  no  definite  proposition 
was  made  as  to  our  future  relations,  should  I  join. 

XQ121.  You  have  not  answered  my  question, 
which  asked,  what  the  business  methods  were  that 
yon  referred  to  in  your  answer  to  Q45  ns  having 
become  disgusted  with. 

A.  As  stated  in  my  last  answer,  no  definite  ar¬ 
rangement  as  to  fees  could  be  reached. 

XQ122.  And  was  this  the  business  method  that 
you  were  referring  to  as  being  disgusted  with? 

A.  When  I  made  that  answer,  it  was  principally 
coupled  with  an  answer  I  made  previously  which 
was,  as  I  understand  now,  not  intended  to  be 
drawn  from  me  by  you. 

XQ123.  Then  so  far  as  the  actual  business  acts 
of  the  Lathams  were  concerned,  there  was  really 
nothing  you  were  disgusted  with? 

A.  In  addition  to  what  I  said,  I  didn’t  consider  405 
that  they  were  businesslike. 

XQ124.  Didn’t  they  make  you  any  definite 
proposition  with  relation  to  how  you  would  benefit 
by  joining  them? 

A.  I  presume  you  mean  in  regard  to  the  shares 
which  they  endeavored  to  force  on  me  during  my 
engagement  with  Edison  with  the  distinct,  to  me, 
object  of  compromising  me.  This  perhaps,  may 
add  something  towards  my  meaning  “disgusted 
with  their  business  methods.” 

XQ12S.  When  did  they  force  this  stock  upon 


[PHOTOCOPY] 


156 

William  K.  L.  Dickson. 


A.  Or  tried  to— to  tlie  best  o£  my  recollection, 
this  was  shortly  after  the  memorable  lamp  test. 

XQ12G.  Hadn’t  yon  bad  any  previous  agree¬ 
ment  of  any  kind  with  the  Lathams  or  any  of  them, 
either  written  or  verbal? 

A.  None  whatever,  except  the  one  mentioned  in 
my  preamble. 

NQ127.  Did  that  agreement  set  ont  a  definite  in¬ 
terest  in  the  business  for  you? 

A.  No.  • 

XQ128.  Did  the  letter  that  you  signed  at  your 
467  house  in  October,  1894,  state  that  it  was  subject  to 
Hr.  Edison’s  approval? 

A.  The  agreement,  if  it  is  desirable  to  call  it  so, 
was  contained  in  two  or  three  lines,  to  the  effect 
that  I  would  use  my  best  endeavors  to  persuade 
Mr.  Edison  to  give  them  the  exclusive  rights  to  use 
the  Edison  film  for  projecting  purposes  and  that 
should  I  succeed,  I  should  have  a  substantial  inter¬ 
est  from  the  proceeds  of  such  exhibitions.  At  that 
time,  there  was  no  thought  other  than  that  Mr  Edi¬ 
son  should  supply  these  films. 

XQ129.  Did  Mr.  Brown  hold  the  stock  for  you  in 
,fi8  trust  by  virtue  of  any  trust  agreement  or  other 
document  which  would  specify  the  terms  on  which 
it  would  be  delivered  tovyou? 

A.  None  whatever,  to  my  knowledge,  unless  my 
legal  adviser  got  them  to  do  something  of  that  kind, 
pending  my  decision. 

XQ130.  He  took  this  stock  before  you  left  Edi¬ 
son,  did  he  not? 

A.  Yes,  to  hold  or  to  return,  as  the  case  might 
be. 

XQ131.  And  how  was  that  to  be  decided? 

A.  As  already  explained,  if  I  found  that  the  ex- 


137 

William  K.  L.  Dickson. 


hibiting  business  would  pay  best,  naturally  I  had 
the  choice. 

XQ132.  Without  your  paying  anything  for  it, 
and  without  having  received  any  consideration 
from  you,  the  Lathams  had  insisted  upon  giving 
Mr.  Brown  this  stock  in  trust  for  you  and  you 
could  have  it  delivered  to  you  at  any  time  you  de¬ 
sired.  Is  that  a  correct  statement? 

A.  No,  quite  incorrect.  Mr.  Brown’s  object  was 
to  bold  the  stock  so  os  to  insure  my  future  the  mo¬ 
ment  I  left  Mr.  Edison.  The  Lathams’  object,  how¬ 
ever,  was  to  try  and  force  the  stock  on  me,  for  me  470 
to  accept  same  s  during  my  sojourn  with  Edison, 
presumably  to  compromise  me  and  force  me  to 
join  them  ns  quickly  as  possible.  Had  I  accepted 
the  stock,  I  should  have  had  to  join  the  Lathams 
before  knowing  if  the  business  were  good  or  bad. 

XQ133.  Which  part  of  my  statement  is  incor¬ 
rect? 

A.  I  mean  that  the  incorrect  part  of  this  relates 
to  my  receiving  stock  without  a  quid  pro  quo.  The 
stock  was  to  be  my  remuneration  for  joining  them 
and  as  I  stated  before,  they  tried  to  get  me  to  take 
■  this  stock  before  I  had  accomplished  anything  for 
them,  their  object  being  to  get  me  to  leave  Mr.  Edi¬ 
son  forthwith. 

XQ134.  Didn’t  you  authorize  Mr.  Brown  to  hold 
the  stock  for  you? 

A.  Yes  and  rightly  too. 

XQ135.  Then  during  the  following  month,  while 
Mr.  Brown  was  holding  this  stock,  which  you  could 
demand  the  delivery  of  at  any  time,  you  continued 
working  for  Mr.  Edison,  undecided  whether  to  take 
the  stock  and  leave  him  or  whether  to  direct  the  re¬ 
turn  of  the  stock  and  stay  with  him.  Have  I  got 
that  much  correct? 


i- 


[PHOTOCOPY] 


472 


158 

William  K.  L.  Dickson. 


A.  Quite  right. 

XQ13G.  Then  when  you  left  Mr.  Edison  on  April 
2nd,  1895,  how  frequently  were  you  at  the  Lathams’ 

A.  Whenever  I  thought  fit  to  go  to  see  how  they 
were  getting  on  and  to  give  them  such  help  as  was 
necessary  preparatory  to  the  proposed  Griffo-Bar- 
net  boxing  match,  which  we  all  thought  would  give 
the  best  test  of  the  capabilities  of  the  machine  in 
question. 

XQ137.  What,  if  any  use,  was  made  of  the  Griffo- 
473  Barnet  film? 

A.  Mr.  Latham  and  his  sons  hired  a  place  on 
Broadway  and  used  one  of  the  kinetoscope  pro¬ 
jectors,  inviting  the  public  to  witness  the  display. 

XQ138.  Were  you  there  and  saw  it? 

A.  I  was. 

XQ139.  The  Griffo-Barnet  film  that  you  pro¬ 
duced  yesterday  is  a  positive  taken  at  some  later 
time,  from  the  negative  which  you  took  of  the 
Griffo-Barnet  fight.  Is  that  right? 

A.  Yes. 

XQ140.  How  did  you  know  how  fast  to  turn 
•474  the  handle  of  the  taking  machine  the  night  of  the 
swinging  lamp  experiment? 

A.  A  piece  of  blank  film  was  run  through  several 
times  and  the  speed  of  turning  the  handle  was 
judged  in  these  preliminary  tests,  but  in  the  tests 
made  with  the  incandescent  lamp  the  machine  was 
turned  by  hand.  The  pictures  taken  of  the  Griffo- 
Barnet  fight  were  run  differently;  to  the  best  of  my 
recollection,  a  small  motor  was  attached  to  the 
camera  and  storage  batteries  used  to  drive  same. 

Adjourned  to  Wednesday,  April  12,  1911,  11 


159 

William  K.  L.  Dickson. 


New  York,  April  12,  1911,  11  a.  m. 

Met  pursuant  to  adjournment. 

Present — Counsel  as  before. 

Cross-examination  of  MR.  DICKSON  con¬ 
tinued  : 

XQ141.  What  was  the  kinetoscope  projector, 
such  as  you  referred  to  in  XQ137? 

A.  Briefly  to  describe  the  kinetoscope  projector, 
in  question  137,  there  was  little  or  no  difference  476 
between  the  Edison  kinetoscope  and  what  they 
were  using,  hence  the  name,  with  the  exception 
that  the  film  was  considerably  wider,  the  slot  in 
the  shutter  enlarged  as  much  as  possible,  so  as  to 
retain  some  degree  of  sharpness  while  the  film  ran 
continuously  from  one  large  spool  above  the  gate 
to  the  lower  reel.  This  was  the  projector  which  I 
had  an  opportunity  of  running  or  testing  in  their 
Broadway  exhibiting  place. 

XQ142.  Was  it  a  peep-hole  machine? 

A.  No. 

XQ143.  That  wasn’t  the  same  machine  that  was  477 
known  as  the  eidoioscope,  was  it? 

A.  Yes. 

XQ144.  Did  this  machine  project  pictures  on  a 
screen? 

A.  Yes. 

XQ145.  How  large  were  the  pictures? 

A.  I  should  judge,  to  the  best  of  my  recollection, 
the  pictures  were  projected  9  feet  by  5,  or  a  little 
less. 

XQ146.  Was  any  use  ever  made  of  the  swing¬ 
ing  light  film? 


[PHOTOCOPY] 


100 

478  William  K.  L.  Dickson. 

A.  None  that  I  know  of,  unless  it  was  kept  as 

XQ147.  I  asked  yon  in  a  previous  question  how 
frequently  after  April  2nd,  1895,  you  were  at  the 
Lathams’  shop,  and  you  said,  “Whenever!  thought 
fit  to  go.”  Please  give  me  a  little  more  tangible 
answer. 

A.  Being  more  or  less  undecided  as  to  what  I 
intended  to  do,  and  wishing  to  probe  into  the  pos¬ 
sibilities  as  described  to  me  in  such  glowing  col- 
ors,  I  went  as  often  as  I  could,  to  be  exact,  which, 
I  believe,  is  what  you  wish  to  know;  might  say, 
to  the  best  of  my  recollection  once  or  twice  a 
week,  and  sometimes  .daily  at  their  'exhibit  on 
Broadway. 

XQ14S.  Prior  to  April  2nd,  1895,  and  all  dur¬ 
ing  the  time  that  you  were  visiting  the  Lathams’ 
shop  and  also  visiting  Lathams  at  the  Hotel  Bar¬ 
tholdi,  where  were  you  living? 

A.  As  stated  in  my  preamble,  you  will  find  I 
mentioned  lfiG  Cleveland  Street,  Orange,  New 
Jersey. 

XQ149.  And  it  is  your  testimony  that  none  of 
480  the  visits  prior  to  the  night  of  the  swinging  light 
episode  were  made  as  matters  of  business,  but 
purely  for  social  purposes? 

K.  No.-  In  my  preamble  I  clearly  stated  that 
it  was  principally  social,  but  with  the  object  of 
trying  to  judge  the  best  thing  to  do,  to  join  them 
or  not,  in  the  exhibition  business. 

XQ150.  When  was  it  that  the  subject  of  pho¬ 
tography  as  a  matter  of  discussion  between  La¬ 
tham  and  yourself  was  no  longer  rigidly  tabooed? 

A.  The  leading  questions  naturally  placed  hy 
Mr.  Latham  tended  always  in  the  direction  of 


161 

William  K.  L.  Dickson. 

moving  photography,  the  matter  nearest  his  lieavt, 
which  to  me  being  dangerous  ground,  by  mutual' 
consent  was  tabooed  as  much  as  possible.  The 
general  principles  relating  to  light  waves,  general 
photography,  as  known  to  all  and  being  common 
property,  were  discussed,  of  course,  at  length  j  but, 
as  stated  before,  neither  by  word  or  action  was 
anything  disclosed  or  discussed  in  relation  to  the 
work  I  had  in  hand  for  Mr.  Edison,  nor  did  I  wish 
to  know  anything  as  to  the  minutiae  or  detailed 
construction  of  what  they  were  doing.  It  waif  bet¬ 
ter  so,  until  I  had  settled  the  momentous  ques¬ 
tion  of  joining  them  or  not. 

XQ151.  But  my  question  asked  when  the  sub¬ 
ject  of  photography  as  a  matter  of  discussion  be¬ 
tween  you  was  no  longer  “rigidly  tabooed”? 

A.  The  one  exception  to  this  rule  I  touched  on 
some  time  back  when  we  discussed  a  curious 
movement  that  I  had  noticed  in  an  old  clock  which 
Mr.  Latham  jumped  at  and  tried.  This,  however, 
as  stated  before,  might  be  put  down  as  a  slip. 
The  movement,  of  course,  as  stated  at  the  time, 
would  be  very  slow. 

XQ152.  Question  repeated. 

A.  I  presume  you  mean  when  did  I  feel  free  to 
discuss  fully  moving  photography  as  known  in 
the  art,  with  the  exception  always,  of  course,  of 
what  was  kept  sacredly  to  myself,  namely:  the 
work  I  had  been  engaged  in  for  Mr.  Edison,  and 
would  say  that  this  occurred  naturally  immediate-' 
ly  after  the  2nd  of  April,  1895. 

XQ153.  You  have  spoken  of  the  differences  be¬ 
tween  the  film,  of  the  Latham  kinetoscope  pro¬ 
jector  and  the  Edison  kinetoscope.  Wasn’t  there 
an  additional  difference,  namely:  that  the  film  of 


the  Latham  device  was  transparent  and  that  of 
the  Edison  kinetoscope  opaque? 

A.  No;  that  could  hardly  be  so,  as  a  negative 
is  never  projected  in  both  the  Edison  kinetoscope 
and  the  so-called  Latham  projecting  kinetoscope 
positives  or  positive  transparences  were  used. 

XQ134.  In  the  Edison  kinetoscope  the  observer 
iooked  directly  upon  the  positive  with  a  light  on 
the  other  side  of  the  positive,  and  the  film  was  suf¬ 
ficiently  opaque  to  prevent  the  light  blinding  or 
confusing  the  eye  of  the  observer.  Is  that  cor¬ 
rect? 

A.  Not  exactly.  In  the  kinetoscope  Viewing 
Machine  a  small  i  or  5  candle  power  lamp  was 
used,  behind  which  a  parabolic  mirror  was  placed, 
the  rays  crossing  at  a  point  through  a  narrow  slot 
in  shutter,  above  which  an  endless  band  of  posi¬ 
tive  pictures  ran  continuously.  These  pictures 
were  enlarged  2 y2  diameters  by  a  magnifying  glass 
and  the  result  appearing  in  a  similar  manner  as 
an  ordinary  transparency  held  up  to  the  light.  In 
the  Latham  projecting  kinetoscope  a  more  power¬ 
ful  light  was  used  in  the  form  of  an  arc  lamp  of 
nearly  3,000  candle  power,  and  concentrated 
through  a  short  focus  condenser  on  to  the  picture 
or  transparent  positive  film,  thence  through  a  pro¬ 
jecting  lens  to  the  screen. 

XQ155.-  Then  it  is  your  testimony  that  the  Edi¬ 
son  kinetoscope  employed  a  substantially  perfectly 
transparent  film? 

A.  Yes. 

XQ15G.  All  through  its  commercial  history? 

A.  Yes. 

XQ157.  What  was  the  construction  of  the 
“curious  stopping  device  for  actuating  a  clock¬ 


work”  which  you  described  to  Latham,  and  which 
he  thought  would  be  useful  for  the  work  on  which' 
he  was  then  engaged? 

A.  It  might  be  briefly  described  as  a  U-shaped 
pair  of  plungers,  the  ends  cut  off  at  right  angles 
coming  to  a  point.  These  plungers  coming  against 
a  peg,  pushed  the  peg  downwards  by  a  sliding  ac¬ 
tion  due  to  the  angle  of  the  plunger.  One  arm  of 
the  U-shaped  plunger  passing  beyond  the  peg  or 
series  of  pegs  placed  at  equal  distances  locked  the 
pegs  in  position,  the  second  arm  of  the  U-shaped 
plunger  engaging  the  next  peg  as  the  other  was  488 
released.  I  think,  perhaps  a  rough  sketch  may 
be  of  some  assistance,  as  I  find  it  rather  difficult 
to  describe  from  memory.  The  fact  is,  this  move¬ 
ment  is  too  well  known  and  can  be  found,  I  think, 
in  any  text  book  on  clock  mechanism. 

XQ158.  When  you  described  this  mechanism  to 
Latham,  were  you  describing  a  mechanism  which 
was  in  principle  that  of  one  of  the  feeding  mech¬ 
anisms  that  had  been  tried  for  cameras  in  Edi¬ 
son’s  laboratory? 

A.  No,  decidedly  not. 

XQ159.  None  of  the  Edison  cameras  that  had  4S9 
been  tried  had  employed  a  feeding  mechanism  in 
which  a  reciprocating  member  having  a  surface  in¬ 
clined  to  the  direction  of  its  reciprocation  had 
caused  intermittent  movement  of  the  film  by  en¬ 
gaging  something  connected  with  the  film  by  the 
inclined  surface? 

Mr.  Page:  Objected  to  as  irrelevant  and 
immaterial,  and  as  an  inquiry  into  matters 
in  no  way  pertinent  to  the  issues  of  the 
,  present  case. 


A.  None  whatever;  in  fact,  it  was  entirely  un¬ 
fitted  for  any  other  purpose  but  for  what  it  was 
intended,  namely:  the  slow  clock-escapement  move¬ 
ment. 

XQ1G0.  At  the  time  that  yon  described  this  de¬ 
vice  to  Latham  yon  knew  that  he. had  in  mind  the 
making  of  cameras  or  projectors  with  intermittent 
moving  films,  did  yon  not? 

A.  Yes;  he  so  intimated  he  was  going  to  or  was, 
I  forget  which. 

XQ1G1.  Where  were  you  when  this  interview 
took  place? 

A.  To  the  best  of  my  knowledge  at  the  Hotel 
Bartholdi. 

XQ1G2.  At  that  time  you  were  familiar  with 
the  work  thus  far  done  at  Edison’s  laboratory, 
with  cameras  having  an  intermittently  moved  film, 
were  you  not? 

Objected  to  as  irrelevant  and  immaterial. 

A.  Yes. 

XQ1G3.  And  by  that  time  had  such  cameras 
been  used  for  the  commercial  work  of  taking  pic- 
"  tures  for  the  Edison  kinetoscope? 

Same  objection. 

XQ1G4.  What  was  the  construction  of  the  feed¬ 
ing  mechanism  in  the  camera  used  in  this  com¬ 
mercial  work? 

Same  objection. 

A.  Briefly,  a  horizontal  continuously  traveling 
disk  containing  one  slot  adjacent  to  a  vertical 


[PHOTOCOPY] 


1G5 

_ William  E.  L.  Dickson.  _  4g3 

three-toothed  disk,  one  of  the  teeth  resting  on  the 
first  mentioned  horizontal  rotating  disk  slipped 
through  said  mentioned  slot,  giving  an  impulse  to 
further  mechanism  controlling  the  film  on  a 
sprocket  wheel.  The  three-toothed  vertical  disk 
was  kept  in  tension  in  a  forward  direction  while 
resting  one  of  the  teeth  on  the  first  mentioned 
horizontal  slotted  disk. 

XQ1G5.  Did  the  intermittently  acting  mech¬ 
anism  pull  directly  upon  the  film  on  the  supply 
reel  without  any  intermediate  devices  engaging  the 
film?  494 

A.  Yes. 

XQXGG.  This  feeding  mechanism  that  you  have 
described  was  the  only  one  used  in  cameras  for 
taking  pictures  for  the  Edison  kinetoscope  prior 
to  your  leaving  Edison,  was  it?  < 

A.  Yes. 

XQ1G7.  Do  you  recall  making  some  experiments 
with  Otway  Latham  at  Columbia  College? 

A.  Yes. 

XQ1G8.  Those  experiments  were  made,  well, 
before  the  end  of  1894,  were  they  not? 

A.  Yes.  495 

NQ1G9.  What  were  those  experiments? 

A.  As  stated  before,  the  experiment  I  wished  to 
try  was  to  see  if  with  a  powerful  arc  lamp  the 
kinetoscope  could  be  used  for  projecting  or  not, 
and  if  so,  then  X  could  approach  Mr.  Edison  for 
the  rights  of  exhibition  by  projection  in  accordance 
with  my  agreement  letter  with  Mr.  Woodville  La¬ 
tham  to  the  effect  that  I  would  use  my  best  en¬ 
deavors  to  persuade  Mr.  Edison  to  give  us  the 
right  of  using  his  film.  We  found  the  experiment, 
which  was  made  openly,  at  Columbia  College,  (that 
being  my  preference)  to  be  sufficiently  encour- 

jr 


— V-~ 


[PHOTOCOPY] 


aging  for  mo  to  keep  my  agreement.  The  experi¬ 
ment  simply  consisted  in  running  an  old  trans¬ 
parent  film  through  an  Edison  kinetoscope  in  the 
form  of  a  short  endless  band,  the  shutter  hole  be¬ 
ing  slightly  enlarged  so  that  we  could  get  more 
light  through.  The  picture  projected  was  about 
o  feet  square.  This  was  done  in  the  presence  of 
some  of  the  Columbia  College  professors;  Mr.  Wood- 
ville  Latham  or  Mr.  Otway  Latham,  I  forget  which 
was  present. 

XQ170.  Do  you  recall  making  a  sketch  or 
497  sketches  of  the  stop  mechanism  or  intermittent 
feeding  mechanism  for  the  Lathams? 

A.  No,  I  hare  no  recollection  and  in  fact,  I  can 
certify  most  positively  that  no  such  sketches  were 
ever  made  by  me  at  any  time  prior  to  my  leaving 
Mr.  Edison,  unless  perhaps  I  sketched  out  the  clock 
stop  motion  already  discussed. 

XQ171.  Can  you  say  positively  whether  you  did 
or  did  not  sketch  out  such  mechanism  and  leave 
the  sketch  with  one  of  the  Lathams  or  Mr.  Lauste? 

A.  To  the  best  of  my  recollection,  I  think  it  is 
quite  likely  that  I  did„as  Mr.  Woodville  Latham 
was  very  anxious  to  try  this  device. 

XQ172.  You  did  know  at  the  time,  then,  that 
Mr.  Latham  wanted  to  try  this  stop  mechanism 
you  suggested,  in  connection  wth  his  development 
of  moving  picture  machines? 

A.  Yes,  for  he  stated  as  much,  that  he  wished  to 
try  it. 

XQ173.  Had  Mr.  Latham,  prior  to  the  first  of 
November,  1894,  repeatedly  shown  you  drawings  of 
a  machine  for  projecting  pictures,  having  intemit- 
tent  movement  of  the  film? 

A.  No. 


167 

William  K.  L,  Diclcso  n. 


A.  To  the  best  of  my  recollection,  he  stated  that 
he  had  many  sketches  and  derices  but  I  positively 
refused  to  inspect  same  for  obvious  reasons. 

XQ175.  Was  the  Columbia  College  experiment 
one  that  lasted  more  than  a  single  day? 

A.  It  lasted  for  an  hour  or  an  hour  and  a  half, 
possibly  two  hours,  as  we  could  not  take  up  the 
time  of  the  professors  and  attendants.  It  was 
only  on  one  day. 

XQ176.  Do  you  know  of  any  experiments  made 
by  Woodville  Latham  in  October  or  September, 

1894,  in  which  part  of  the  apparatus  employed  500 
was  furnished  by  you  from  the  Laboratory  of  Mr. 
Edison? 

A.  None  whatever,  with  the  exception  of  the  Co¬ 
lumbia  College  test  which  I  made. 

Beoess. 

XQ177.  Mr.  Lauste  came  to  this  country  to  give ' 
his  testimony  in  this  case  at  the  same  time  that 
you  did,  did  he  not? 

A.  Yes. 

XQ178.  Was  it  you  who  arranged  with  him  over 
there  about  coming?  501 

A.  No. 

XQ179.  When  did  you  last  see  him  on  the  other 
side? 

A.  At  his  house  a  week  before  leaving. 

XQ180.  And  when  last  before  that? 

A.  About  a  year  and  a  half  before. 

XQ181.  You  came  over  on  the  same  steamer? 

A.  Yes. 

XQ182.  You  both  knew  that  you  were  coming 
over  to  give  testimony  with  reference  to  the  work 
in  Latham’s  shop? 


[PHOTOCOPY] 


XQ183.  And  am  I  to  understand  that  tlie  ar¬ 
rangements  for  Lauste  coming  over  here  had  all 
been  made  entirely  independently  of  you? 

A.  Yes. 

XQ184.  You  do  not  fix  the  date  of  February 
26, 1895,  except  by  what  yon  have  read  in  a  printed 
copy  of  Latham’s  previous  testimony,  do  you? 

A.  No. 

XQ1S5.  Did  you  ever  write  a  letter  to  Lauste 
asking  him  whether  he  remembered  that  yon  were 

603  the  one  who  had  suggested  the  loop  in  the  film  of 
the  Latham  camera? 

A.  No,  I  hare  no  such  recollection. 

XQ18G.  Can  you  say  positively  that  yon  never 
wrote  such  a  letter  to  him? 

A.  I  can. 

XQ1S7.  Or  any  other,  asking  him  whether  he 
remembered  your  invention  of  any  part  of  the 
Latham  camera — or  something  to  that  general  ef¬ 
fect? 

A.  I  have  no  recollection  whatever  of  writing 
any  letter  on  this  subject. 

XQ1SS.  In  Complainant’s  Exhibit,  Lauste  Depo- 

604  sition,  I  find  the  following:  “XQ13G.  Well,  did 
Mr.  Dickson  speak  to  you  about  it?  A.  No;  he 
wrote  to  me  some  time  ago,  and  asked  me  if  I  re¬ 
member  that  he  is  the  inventor  of  the  loop,  and  I 
said  no,  because  I  made  the  machine  before  he 
came.”  Can  you  say  positively  that  there  is  no 
basis  for  this  statement? 

A.  None  whatever,  I  have  no  recollection  of 
writing  any  such  letter.  I  remember  calling  him 
up  on  the  ’phone  prior  to  going  to  his  house  and 
telling  him  that  there  was  a  case  coming  on  which 
1  learned  from  Mr.  Koopman,  also  over  ’phone. 


169 

William  K.  L.  Dickson. 

.  that  we  might  have  to  go  out  to  America  to  testify 
as  to  the  Latham  inventions,  and  there  was  a 
question  of  a  loop  to  bo  testified  on.  ' 

XQ189.  That  was  just  shortly  before  you  started 
to  this  country,  the  end  of  last  month? 

A.  Yes. 

XQ190.  Had  Lauste  already  heard  of  it,  did  he 
say? 

A.  Yes. 

XQ191.  In  your  conversations  with  Lauste,  be¬ 
ginning  on  that  day  over  the  telephone,  and  up  to 
the  time  that  he  gave  his  testimony,  -what  was  said 
between  you  as  to  who  had  suggested  the  loop? 

A.  Mr.  Lauste,  in  his  cabin  on  board  the  “Bal¬ 
tic”  talked  on  various  things  in  connection  with 
his  old  work  and  also  touched  on  the  loop,  knowing 
as  he  did  that  that  feature  of  the  work  seemed 
to  be  of  importance  and  explained  how  he  had  first 
thought  of  it  by  seeing  a  loop  in  a  certain  book 
at  some  time  or  other,  catalogue,  I  believe  he  said, 
of  machinery,  and  that  when  they  were  experiment¬ 
ing  Mr.  Latham  was  very  desirous  of  preventing 
the  film  from  tearing  and  so  this  loop  was  added 
and  a  general  talk  of  this  kind.  I  wasn’t  particu¬ 
larly  interested  in  all  this.  It  was  my  part  of  the 
programme  to  remember  what  I  did,  what  I  saw 
and  so  on. 

XQ192.  The  testimony,  or  the  extract  from  testi¬ 
mony  given  by  Lauste,  which  I  read  to  you,  was 
given  in  1898,  13  years  ago.  Having  this  in  mind, 
does  it  aid  to  refresh  your  recollection  and  modify 
it  in  any  way  after  your  having  written  such  a 
letter? 

A.  No,  I  can  only  state  what  I  remember  and 
what  I  see  and  say  to  the  best  of  my  knowledge 


505 


607 


[PHOTOCOPY] 


508  _ "William  K,  L,  Dickson. 

that  I  have  no  recollection  whatever  of  writing 
sudi  n  letter. 

XQ193.  Was  the  feature  of  a  loop  between  the 
exposure  window  and  the  supply  roll  a  new  one 
to  you  when  yon  saw  it  at  the  swinging  light 
episode? 

A.  Yes. 

XQ19J.  Is  it  true  that  yon  told  Mr.  Laustc  before 
T.austc  had  met  Latham  that  you  had  a  good  situa¬ 
tion  for  him  in  connection  with  a  machine  for 
projecting  pictures  and  did  you  then  give  him  a 

509  letter  of  introduction  to  Mr.  Latham? 

A.  Part  right,  part  wrong.  I  gave  Mr.  Lauste 
a  letter  of  introduction  to  Mr.  Woodville  Latham, 
not  knowing  or  having  the  slightest  clue  that  Mr. 
Latham  was  going  into  competition  which  on  the 
face  of  it  would  have  been  to  jeopardize  my  own  in¬ 
terests.  It  was  after  I  had  given  this  introduction 
that  Mr.  Woodville  Latham,  in  an  interview,  said 
that  he  had  some  good  ideas  in  moving  photography 
which  he  wished  carried  out.  No  mention  was 
made  in  my  letter  of  introduction  as  can  plainly 
be  seen,  in  regard  to  what  class  of  work  Mr.  La- 

510  tlmm  wanted  Mr.  Lauste.  to  do. 

XQ195.  At  the  time  you  gave  the  letter  to  Lauste, 
did  you  know  that  the  younger  Lathams  were 
engaged  in  business  in  connection  with  the  employ¬ 
ment  of  Edison  kinetoscopes? 

A.  I  knew  the  young  Lathams  had  six  or  more 
machines  on  exhibition  somewhere  in  New  York 
and  if  I  remember  correctly,  I  simply  inferred  that 
they  wished  a  good  mechanic  to  look  after  and 
keep  their  machines  in  running  order. 

XQ190.  Do  you  recall  anything  as  to  what  the 
hook  was  that  you  were  using  in  the  Edison  Lab- 


171 

William  K.  L.  D iclson. 


oratory  and  that  Laustc  referred  to  as  being  one 
that  contained  a  showing  of  this  loop? 

A.  I  am  afraid  I  cannot  help  you  as  I  do  not 
remember  the  book. 

XQ197.  Do  you  recall  whether  Lauste  ever  came 
to  you  while  you  were  still  with  Edison  to  get  what 
ideas  you  had  for  these  moving  picture  machines? 

A.  I  do. 

XQ19S.  State  the  circumstances,  please. 

A.  Mr.  Lauste  came  over  from  New  York  unso¬ 
licited  by  me  and  told  me  he  was  instructed  by 
Mr.  Woodville  Latham  to  see  if  I  would  help  them  512 
in  regard  to  some  difficulty  or  something  or  other, 
presumably  a  stop  motion  of  some  kind.  I  re¬ 
member  distinctly  and  wish  it  quite  clearly  under¬ 
stood  that  in  keeping  with  all  I  did  at  the  time,  I 
pointed  out  to  Mr.  Lauste  that  I  could  give  him  no 
assistance  whatever  in  the  art  until  I  had  made 
up  my  mind  to  join  forces  with  them. 

XQ199.  Do  you  remember  whether  before  the 
time  of  the  swinging  light  pictures  you  many  times 
told  Lauste  that  you  didn’t  like  coming  to  the 
shop  because  it  was  compromising  to  you  and  that 
when  you  would  leave  Edison  it  would  be  all  right,  pjg 
that  yon  would  come  every  day  but  until  then  you 
could  not  do  it? 

A.  Quite  right.  I  remember  every  word  of  it. 

XQ200.  How  long  was  that  before  the  day  when 
you  told  Mr.  Edison  that  he  would  have  to  choose 
between  Gilmore  and  yourself  and  upon  his  refus¬ 
ing  to  discharge  Gilmore,  the  handing  in  of  yonr 
resignation? 

A.  I  haven’t  the  remotest  idea.  What  I  said  to 
Lnuste  did  occur  ns  stnted,  but  when  it  occurred, 

I  do  not  remember. 

XQ201.  Did  the  film  pass  upward  or  downward 


[PHOTOCOPY] 


anything  about  wlmt  has 


in  the  machine  that  took  the  swinging  light  photo¬ 
graphs? 

A.  Downward. 

XQ202.  Did  yon  know  E.  W.  Kleinert? 

A.  Yes,  I  saw  a  man  by  that  name  at  the  Latham 
shop. 

XQ203.  Do  yon  know  anything  about  what  has 
become  of  him? 

A.  Xo. 

XQ204.  Did  you  take  a  picture  or  help  to  take  a 
picture  with  the  same  camera  on  the  roof  of  the 
Scott  building  after  the  swinging  light  episode  and 
before  the  picture  of  the  Griffo-Barnet  fight? 

A.  Xo. 

XQ205.  Do  you  recollect  a  conference  in  Xew 
York  between  Otway  Latham,  yourself,  your  wife, 
Mr.  Edmond  Cougar  Brown  and  Mr.  John  Murray 
Mitchell? 

A.  I  do. 

XQ20G.  State  the  time  when  this  conference  oc¬ 
curred  and  also  state  what  occurred  at  the  con¬ 
ference. 

A.  I  have  no  recollection  of  the  date  of  confer- 
1  ence  but  I  remember  it  was  in  regard  to  the  same 
old  thing,  to  join  or  not  to  join  and  also  in  relation 
to,  that  if  I  would  join  them,  I  should  have  a  cer¬ 
tain  amount  of  stock  allotted  to  me.  I  think  that 
was  the  purpose  of  the  conference  in  question,  but 
as  for  the  stock,  this  stock  was  never  transferred 
to  me  nor  have  I  to.  this  day  seen  a  share  certificate 
and  it  was  only  the  other  day  that  Mr.  Lauste 
handed  me  for  my  inspection  a  share  certificate  un- 
der  the  heading  of  the  Lamda  Company. 

XQ207.  Wasn’t  it  at  this  conference  thnt  it  was 
agreed  among  all  of  you  that  a  quarter  of  the 
stock  of  the  Lamda  Company  be  assigned  to  Mr. 


Brown  because  you  did  not  wish  to  make  a  contract 
in  your  name  and  so  place  yourself  that  the  pro¬ 
priety  of  your  actions  might  be  questioned? 

A.  Xo.  The  stock  at  Mr.  Edmond  Congar 
Brown’s  suggestion,  should  be  put  in  his  name,  for 
the  sole  reason  that  he  wished  to  safeguard  my  in¬ 
terests  in  case  I  should  join  them,  the  business 
proving  satisfactory.  X  know  very  little  more 
about  this,  but  I  have  no  doubt  Mr.  Edmond  Con- 
gar  Brown  could  give  you  all  the  information  you 
require. 

XQ20S.  You  gave  Mr.  Brown  a  power  of  attorney  5XS 
to  act  for  you  in  these  matters,  did  you  not? 

A.  I  do  not  remember  giving  Mr.  Brown  a  power 
of  attorney.  Mr.  Brown  was  my  legal  adviser  in 
many  other  matters  and  did  this,  if  I  remember 
right,  as  a  friend. 

XQ209.  What  was  the  object  of  having  legal  ad¬ 
visers  for  both  sides  present  at  this  conference, 
if  its  only  purpose  was  to  discuss  the  advisability 
of  your  making  a  connection  with  Latham? 

A.  I  give  it  up,  presumably,  however,  to  come  to 
some  definite  understanding  that  if  I  did  leave,  I 
should  be  provided  for. 

XQ210.  I  understand  that  before  the  supplemen-  519 
tary  roller  on  the  upper  sprocket  wheel  which  you 
suggested  was  added,  the  film  came  straight  down. 

Is  this  supplementary  roller  shown  on  the  sketch 
Lauste  made  in  this  case? 

A.  Yes. 

XQ211.  It  is  the  uppermost  roller  of  the  sketch, 
is  it? 

A.  Yes. 

XQ2I2.  And  before  this,  the  film  was  only  en¬ 
gaged  by  one.  tooth  on  the  upper  sprocket,  is  that 


A.  One  or  two  teeth. 

XQ213.  Ami  that  put  too  much  strain  on  these 
perforates  and  frequently  resulted  in  tearing  the 

A  I  remember  running  through  a  long  piece  o 

jmffiTt  •”  f6"'  dnys  i,1'ior  tlle  GHffo-Bar- 
net  fight  and  i  seemed  to  run  very  satisfactorily 
untd  there  would  be  a  little  slack.  When  this  wm 
taken  up  a  slight  jerk  would  take  place  and  or 
examination,  I  noticed  a  roughness  in  one  or  twe 
of  the  perforations.  This,  however,  did  not  depre- 
mate  in  any  way  that  I  could  see,  the  results. 
I,  however,  thought  it  advisable  when  trying  this 

urthei  along  towards  the  upper  center  of  the 
sprocket  wheel  to  place  at  this  particular  point  a 

not?//  b?  °1'  S°IUe  otIler  soft  material,  I  do 
not  ust  remember  which,  grooved  out  on  the  sides 
to  allow  the  spocket  teeth  to  enter.  The  result 

as  i  nfl  'r  "T  SiWply  t0  atM  “  fc*  more  teeth 
as  an  additional  precaution  against  any  possible 
danger  of  roughness  on  the  edge  of  the  fiL  per 

ZrTu  A/?!  know^if  this  was  absolutely  es- 
sential  but  it  had  its  use. 

XQ214.  What  do  you  know  ns  to  Latham’s  fi- 
tbe  period  — 

"as  a  matter  X  had  nothing  to  do  with 

XQ215.  The  discnssions°  betweeT  you  relative 
to  your  joining  the  Lathams,  did  not  brin-  out 
any  expectations  on  Latham’s  part  that  you  would 
financially  contribute  to  the  enterprise,  did  Thev’ 


j 


175 

- K.  L.  Dickson, 

XQ21C.  Did  you  and  Latham  ever  discuss  -not 
outing  the  camera  which  you  saw? 
t'Z°’  not  t0  ffly  recollection. 

XQ-17.  Is  there  any  other  error  that  you  can 

U  took  the  swinging  light  picture  pres 

n U1  G  deffad<,itral  101161  that yoa 

«nd  the  different  path  of  the  film  produced  there- 
ont'thfnVlklC?lirn(3ed  T  l0°ks  aI1  ri^t.  The 

the7upp?rSor  arn?eN  er/b°Ut  “  iS  iUsi  ™ 

XQ218.  What  do  the  letters  K.  M.  0  D  in  tha 
name  of  your  syndicate  indicate’  '  '  “ 

man  ?  < 1  *  E.  B.  Koop- 

L.  DicSon  ’  Heman  Casler  and  W.  K. 

v*Xr  2?'  At  the  time  °f  the  testimony  in  Latham 
fact  ^ 

m  a  general  way,  the  character  of  “  d 

involved  therein9  *  lnvention 

in  Orange?  '  °f  y°W  Wife  at  house' 

A-  ^hnt  I  should  that  day  leave  Mr.  Edison  and 


[PHOTOCOPY] 


_ William  K.  L,  Dickson. _ 

work  with  them  in  developing  a  taking  machine  on 
the  lines  of  the  Edison  so-called  kinetograph,  not 
that  I  really  think  tlint  Mr.  Woodville  Latham,  to 
do  him  justice,  wished  me  to  divulge  anything  I  had 
been  doing  for  Mr.  Edison  but  wished  to  have  an 
apparatus  under  their  control  that  they  could  make 
films  for  exhibition  purposes.  It  was  modified,  of 
course,  to  what  I  have  already  stated,  and  in  fact, 
it  was  tlie  only  thing  to  be  done,  namely,  to  get 
Mr.  Edison  to  supply  these  films  for  this  particu¬ 
lar  exhibition  purposes. 

XQ221.  Please  state  all  that  yon  can  remember 
that  was  contained  in  the  letter  which  you  received, 
and  as  a  result  of  which  yon  visited  the  shop  and 
photographed  tlie  swinging  light? 

A.  I  cannot  bind  myself  to  the  exact  wording 
but  the  sense  of  the  letter  was  to  the  effect  that  I 
should  come  at  once,  as  they  believed  they  had 
something  fine  and  I  must  see  it.  It  was  a  jubilant 
epistle  and  so  I  went. 

XQ222.  Didn’t  the  letter  mention  that  it  was  a 
camera  they  wanted  to  show  you? 

A.  I  do  not  think  so.  I  do  not  think  there  was 
any  description.  I  naturally  knew  or  inferred  that 
it  was  the  camera;  as  stated  before  I  was  aware 
that  they  were  working  on  such  a  device,  although 
I  had  never  seen  it  in  detail.  In  fact,  I  purposely 
kept  away  at  one  of  the  visits  from  looking  at  the 
construction.  Upon  that  evening,  however,  the 
the  whole  thing  was  explained  and  shown  me. 

XQ223.  Didn’t  you  go  over  expecting  to  be  shown 
a  camera? 

A.  Naturally.  The  purport  of  the  letter  indi¬ 
cated  that  they  wished  to  show  me  something  fine 
or  good,  whatever  the  words  were. 

Adjourned  to  Friday,  April  14, 1911, 10.30 
A.  M. 


_ _ William  K.  L.  Dickson. _  ^ 

New  York,  April  14,  1911, 

10.30  A.  M. 

Met  pursuant  to  adjournment. 

Present:  Counsel  as  before. 

Cross-examination  of  MR.  DICKSON  continued : 

XQ224.  Did  you  ask  the  Lathams  or  any  of  them 
to  choose  the  location  for  a  shop  as  near  as  prac¬ 
ticable  to  the  ferry  connecting  with  the  trains  for 
Orange  or  something  to  that  effect?  530 

A.  No,  decidedly  not.  This  was  proposed  to  me 
by  Mr.  Woodville  Latham  as  being  more  convenient 
for  me  to  come  over  and  see  their  work  and  help 
them.  This,  of  course,  is  another  of  those  garbled 
and  vindictive  statements  made  in  the  testimony  of 
that  gentleman  and  which  I  am  here  to  confute 
whenever  I  can. 

XQ225.  Before  the  night  of  the  swinging  light, 
did  you  see  any  efforts  made  to  project  pictures 
with  a  machine  of  the  same  general  character  as 
the  machine  used  to  take  the  pictures  of  the  swing¬ 
ing  light  or  with  that  same  machine  at  the  Frank¬ 
fort  Street  shop?  631 

A.  No. 

XQ22G.  Did  you  supply  any  film  for  that  pur¬ 
pose  or  for  any  purpose  in  January  or  February 
1896,  to  the  Lathams  or  anyone  connected  with 
them? 

A.  No,  decidedly  not. 

XQ227.  Did  you  find  Otway  Latham  and  Gray 
Latham  or  either  of  them  skilled  as  mechanics? 

A.  No,  but  Mr.  Otway  appeared  to  be  very 
handy.  . 

XQ228.  When  yon  visited  the  Latham  shop  be- 


—4 - 


[PHOTOCOPY] 


ITS 

532  _ 'William  K.  L,  Dickson. 

fore  the  night  of  the  swinging  light  pictures,  was  it 
quite  a  frequent  occurrence  that  Mr.  Woodville 
Latham  would  not  be  there? 

A.  As  I  -went  purely  and  alone  on  Mr.  Wood¬ 
ville  Latham’s  invitation,  with  possibly  occasional 
invitations  from  Otway  Latham,  I  would  find  the 
invitors  always  there,  except  on  the  night  of  the 
lamp  test  when  Mr.  Woodville  Latham  was  ill  or 
indisposed.  •  ’ 

XQ229.  At  the  time  of  these  various  visits,  do 
you  know  whether  Mr.  Otway  Latham  knew  you 
were  working  with  Mr.  Edison  upon  photographic 
•machines?  * 

A.  Decidedly,  since  he  and  his  people  bought 
kmetoscopes  which  they  had  on  exhibition  some; 
where  in  the  city. 

XQ230.  On  April  2nd,  1895,  did  you  consider 
•Latham  obligated  to  you  in  any  way? 

A.  No,  not  in  any  way. 

XQ231.  How  about  any  earlier  period  than 
that? 

A.  The  same  answer  applies  as  naturally  X  could 
not  charge  them  for  erecting  the  Edison  kineto- 
634  scopes  at  their  exhibit  as  X  was  paid  to  do  this  bv 
Edison.  J 

XQ232.  Did  you  meet  Gray  Latham  and  Otway 
Latham  or  either  of  them  at  any  time  at  the  Labor¬ 
atory  of  Mr.  Edison? 

A.  Yes,  in  the  early  part  of  1894,  they  came  to 
Mr.  Edison’s  Laboratory  to  purchase  some  kineto- 
scopes  for  exhibition  purposes.  It  was  then  that 
I  met  them  for  the  first  time  and  possibly  three 
times  after  that  during  this  deal. 

XQ233.  Did  you  ever  tell  either  Gray  Latham  or 
Otway  Latham  at  Edison’s  Laboratory  that  you 


were  the  real  inventor  of  the  kinetoscopo, 
suggested  the  idea  to  Edison? 

A.  To  the  best  of  my  recollection,  I  hardly 
even  if  I  had  been  the  inventor,  so-called.  w*VI  i' 
have  been  policy  to  have  made  such  a  statement  to 
utter  strangers.  I  am  confident,  however,  that  this 
is  another  spiteful  dab. 

XQ234.  Are  you  positive  in  your  recollection  that 
there  is  no  basis  whatever  for  any  such  statement 
as  this? 

A.  I  can  state  emphatically  that  I  haw  not  the 
slightest  recollection  of  any  such  conversation. 

XQ235.  Gan  you  swear  positively  that  you  did 
not  make  any  statement  of  this  character  to  either 
of  the  Lathams  at  the  Edison  Laboratory? 

Mr.  Page:  Objected  to  as  irrelevant  and 
immaterial,  as,  if  the  witness  is  testify'11? 
to  the  best  of  his  recollection,  it  is 
immaterial  how  he  answers  this  question. 

A.  As  stated  before,  I  have  no  recollection  of 
making  such  a  statement,  and  I  am  inclined  to 
believe,  to  the  best  of  my  knowledge,  the  conversa¬ 
tion  did  not  take  place  or  was  turned  and  twisted  637 
for  a  purpose. 

XQ23G.  You  do  recollect,  however,  do  you  not, 
that  at  the  Edison  Laboratory,  you  did  express  to 
one  of  the  Lathams  your  displeasure  at  not  having 
received  the  credit  due  you  for  the  work  in  moving 
picture  lines  you  had  done  with  Edison? 

A.  This  question  is  in  keeping  with  the  Iasi  and 
tends  to  show  that  there  was  some  hidden  object  it' 
making  these  various  statements.  I  again,  will 
most  emphatically  state  that  I  have  no  recollection 
of  such  conversations  especially  with  men  that  X 
kne.w  nothing  about. 


[PHOTOCOPY] 


Dickson. 


XQ237.  Do  .you  remember  whether  or  not  in 
your  conversation  with  Gray  or  Otway  Latham  at 
the  Edison  Laboratory  you  suggested  or  intimated 
that  an  association  with  them  in  the  kinetoscope 
business  would  be  more  pleasing  to  you  than  as¬ 
sociation  with  Edison? 

A.  I  think  on  the  face  of  it,  this  would  he  utterly 
absurd,  considering  the  number  of  years  I  had  been 
so  delightfully  associated  with  Mr.  Edison  and 
that  my  work  was  so  highly  congenial  to  me  in 
every  respect.  I  was  head  of  the  electrical  mining 
639  department  ns  well  as  the  head  of  the  kinetoscopie 
and  kinetograpliic  moving  picture  department  and 
tin's  should  he  answer  enough  to  show  the  ridicu¬ 
lous  and  I  again  use  the  word,  vindictive  nature  of 
the  series  of  statements. 

XQ238.  Do  you  remember  that  Otway  Latham 
and  Gray  Latham  asked  you  if  you  would  he  will¬ 
ing  to  join  with  them  in  their  work  and  that  after 
some  hesitation  you  agreed  that  you  would  talk  the 
matter  over  with  your  wife  and  give  a  definite  an¬ 
swer  at  a  later  time? 

A.  Quite  right.  This,  however,  has  been  ex- 
540  plained  in  previous  answers  and  questions. 

XQ239.  Did  you  see  any  JS94  or  1895  drawings 
made  by  Lauste  for  cameras  or  projecting  machines 
or  parts  thereof? 

A.  I  saw  several  sketches  lying  around  on  table 
and  bench,  hut  was  particularly  careful  not  to  in¬ 
spect  same,  for  obvious  reasons. 

XQ240.  The  reasons  may  be  “obvious,”  but  in 
all  this  deposition,  I  have  been  unable  to  find  any¬ 
thing  that  explains  why  your  reasons  for  not  ex¬ 
amining  these  drawings  and  apparatus  in  process 
of  construction  did  not  equally  apply  to  prevent 
you  when  you  received  a  letter  from  Otway  Latham 


181 

_ 'William  K.  L,  Dickson. _ 

from  which  you  understood  that  a  moving  picture 
camera  had  been  completed,  ready  .for  your  in¬ 
spection,  from  visiting  the  shop  and  obtaining  the 
exact  information  as  to  that  camera.  Do  you  de¬ 
sire  to  explain  any  further? 

Counsel  for  complainant  suggests  that  this 
may  be  due  to  a  lack  of  perception  on  the 
part  of  Defendant’s'  Counsel  and  not  such 
an  inference  as  others  might  draw  from  the 
testimony  and  therefore  objects  to  all  but 
the  interrogative  portion  of  the  question  as 
irrelevant  and  immaterial. 

A.  The  matter  is  as  simple  as  A  B  C,  and  I  have 
endeavored  throughout  this  testimony  to  various 
answers  and  questions  to  show  that  I  was  particu¬ 
larly  careful  as  long  as  I  was  not  associated  with 
the  Lathams,  as  a  matter  of  honor,  to  probe  and 
unduly  examine  into  their  work.  The  same  thing 
applied  to  the  fact  that  I  was  scrupulously  careful 
not  to  divulge  anything  that  was  going  on  at  Mr. 
Edison’s  laboratory  and  it  was  not  until  I  was  in¬ 
vited  to  see  the  completed  camera'  on  the'  night'  of 
the  swinging  lamp  test  that  I  commenced  to  see  543 
the  possibility  of  joining  the  Lathams'which  even 
then  was  most  uncertain.  Although  this  machine 
was  thoroughly  explained  and'examined  by  me,  I 
felt  that  even  if  I  did  not  join  I  could,  of  course, 
not  take  any  advantage  of  what  I  had  seen;  In 
conclusion,  would  add,  as  stated  before,  that  this, 
was  forced  on  me. 

XQ241.  In  your  answer  to  XQ1C4  you  described 
the  feeding  mechanism  of  the  camera  used  in  the 
commercial  work  for  producing  pictures  for  the 
Edison  kinetoscope.  Was  the  horizontal  continu- 


[PHOTOCOPY] 


182 

644  _ William  IC.  L.  Dickson. 


ous  travelling  disc  yon  speak  of  arranged  like  the 
disc  25  of  tlie  Edison  Patent  12,037,  except  tlmt  it 
had  one  slot  instead  of  six  and  was  the  vertical 
three  toothed  disc  arranged  like  the  disc  23  of 
that  patent  with  relation  thereto  except  that  it  had 
three  teeth  instead  of  six? 

Mr.  Page:  Ojected  to  as  irrelevant  and 
immaterial  and  as  fishing  for  informa¬ 
tion,  no  way  pertinent  to  the  questions  in¬ 
volved  in  this  case. 

545 

A.  My  explanation  or  description  as  given  in  my 
answer  164  is  purely  from  memory,  some  22  years 
ago,  was  broadly  a  description  of  the  action  of  such 
a  machine.  What  I  described  doubtless  was  suf¬ 
ficiently  correct  for  the  purpose  and  perhaps  one 
of  the  modifications  we  made  at  that  time.  The 
patent  drawing  entitled  “T.  A.  Edison  Kinetoscope 
No.  12,037”  shows  such  a  modification  and  looks 
quite  correct;  showing  more  teeth  on  the  vertical 
disc  with  a  corresponding  additional  number  of 
slots,  in  the  traveling  horizontal  disc.  The  terms 

546  horizontal  and  verti<Sal  do  not  as  closely  apply  to 
this  drawing  as  in  my  rough  description  from  mem¬ 
ory,  although  the  action  is  the  same. 

XQ242.  How  long  a  film  was  used  in  the  Edison 
kinetoscope? 

A.  In  the  first  models,  there  was  about  between 
25  and  30  feet  and  later  48  feet. 

XQ243.  48  feet  was  the  longest  length  of  film 
used  on  the  commercial  kinetoscope? 

A.  Yes. 

XQ244.  And  was  the  same  length  or  a  lesser 
length  used  on  the  camera  when  taking  pictures 
for  the  kinetoscope? 


183 

_ _ William  K.  L,  Dickson.  ^ 

Mr.  Page:  The  objection  heretofore  made 
to  Counsel  for  Defendant  using  this  case 
as  a  fishing  excursion  for  information  in  no 
way  necessary  or  relevant  to  the  issues  is 
objected  to  as  a  gross  abuse  of  the  privil¬ 
eges  of  cross-examination. 

A.  It  depended  somewhat  on  the  subject  and  on 
some  occasions  two  24  foot  lengths  were  used  on 
several'  subjects  and  sometimes  three  subjects  pho¬ 
tographed  and  joined  together  to  make  up  the  re¬ 
quired  length  averaging  about  48  feet  on  the  last  548 
models,  or  when  the  occasion  required,  a  complete 
48  length  was  used  in  the  taking  camera  developed, 
printed,  and  the  positive  placed  in  the  kinetoscope 
in  the  form  of  an  endless  band. 

XQ245.  How  did  the  thickness  of  the  film  used 
in  the  kinetoscope  compare  with  the  thickness  of 
the  film  used  in  kinetoscope  projectors, — if  you 
can,  state  the  thickness  of  each. 

Mr.  Page:  Same  objection. 

A.  I  am  afraid  this  is  rather  too  much  of  a  task. 

My  distinct  remembrance,  however,  is  that  the  film  549 
used  in  the  camera  was  extremely  thin,  almost  like 
paper  but  very  tough.  The  positive,  if  I  remem¬ 
ber  well,  was  somewhat  thicker  as  used  in  the 
Edison  kinetoscope.  I  had  the  pleasure  of  hand¬ 
ing  in  a  sample  of  the  Griffo-Barnet  positive  film 
used  by  the  Lathams  in  their  projecting  machine 
and  I  think  that  both  the  slow  emulsion  positive 
films  used  in  the  Edison  kinetoscope  and  in  the 
so-called  Latham  kinetoscope  projector,  were  very 
much  alike  as  to  thickness. 

.  XQ246. .  And  as  I  understand  you,  the  film  used 


[PHOTOCOPY] 


184 

'  550  _  William  K.  L.  Dickson, _ 

in  tlie  camera  was  much  thinner,  that  is,  the  Edison 
camera.  Is  that  right? 

A.  Somewhat  thinner,  yes. 

XQ247.  Two  thousandths  of  an  inch  thick  or 
thinner? 

A.  I  give  it  up,  too  difficult  to  remember  such 
exact  measurements  after  so  many  years.  For  that 
reason  I  made  my  answer  comparative. 

XQ248.  How  did  the  color  of  the  film  used  in 
the  Latham  camera  compare  with  that  of  Edison 
camera? 

B5)  A.  In  your  question,  I  presume  yon  mean  the 
unexposed  film.  Nearly  all  film  used  from  that 
time  to  the  present' has  a  creamy  delicately  tinted 
greenish  appearance. 

XQ249.  Has  all  the  unexposed  film  from  the  be¬ 
ginning  been  of  that  color,  do  you  know? 

Cross-examination  Closed. 

Re-direct  Examination  by  Hr.  Page: 

RDQ250.  Have  you  any  pecuniary  interest  in  the 
outcome  of  this  suit?  v 
553  A.  None  whatever. 

Re-cross  Examination  by  Mr.  Eyre: 

RXQ251.  Do  you  hold  stock  in  the  K.  M.  C.  D. 
Syndicate? 

A.  I  do  not  think  it  can  be  called  holding.stock. 

I  have  an  interest  or  had  an  interest  in  this  K. 
M.  C.  D.  Syndicate,  but  having  disposed  of  niy  hold¬ 
ings. in  all  the  subsidiary  companies,  including  the 
American  Biograph  &  Mutoscope  Company,  my  in¬ 
terest  therefore  in  the  K.  M.  C.  D.  wduld  naturally 
come  to  an  end. 


185 

William  E.  L.  Dickson. 

- - - - -  553 

RXQ252.  Is  the  K.  M.  C.  D.  Syndicate  an  incor¬ 
porated  company? 

A.  No,  it  is  still  an  agreement  of  partnership. 
RXQ253.  Do  you  mean  that  your  present  in¬ 
terest  in  the  K.  M.  C.  D.  Syndicate  is  one  of  no 
.value  whatever? 

A.  Yes,  unfortunately. 

RXQ254.  The  K.  M.  C.  D.  Syndicate  owns 
nothing  of  any  kind,  is  that  it? 

A.  For  many  years  past,  I  have  received  nothing 
from  the  K.  M.  C.  D.  and  with  the  exception  of  the 
K.  M.  C.  D.  Syndicate  holding  one  or  two  side  554 
lines,  which  in  fact  do  not  know  exactly  what  they 
are,  anyway,  nothing  seems  to  have  come  of  the 
side  lines,  I  later,  as  stated  before,  sold  out  my 
shares  in  any  company  or  companies  which  should 
have  paid  interest  in  a  certain  proportion  to  this 
quarter  partnership,  hence  my  explanation  that 
if  I  held  no  shares,  there  could  be  no  division  of 
interest  as  far  as  I  was  concerned. 

RXQ255.  How  recently  did  you  sell  out? 

A.  About  three  years  ago  or  maybe  more,  I  sold 
out  my  last  holding,  namely,  the  American  Muto- 
Jscope  &  Biograph  Company  shares. 

RXQ256.  What  arrangements  were  made  with  555 
jyou  as  to  coming  over  here  to  give  this  testimony? 

A.  A  fee  of  £300,  out  of  which  I  should  pay  my 
own  expenses. 


Deposition  Closed. 

W.  K.  L.  DICKSON. 


Legal  Department  Records 
Motion  Pictures  -  Case  Files 

Motion  Picture  Patents  Company  v. 

Universal  Film  Manufacturing  Company  et  al. 

Jesse  Isidor  Straus  et  al.  v.  Victor  Talking  Machine  Company 

This  folder  contains  two  U.S.  Supreme  Court  opinions  of  April  9, 1917. 
The  first  pertains  to  the  suit  brought  by  the  Motion  Picture  Patents  Co.  against 
the  Universal  Film  Manufacturing  Co.  and  other  defendants  for  infringement 
of  Woodville  Latham's  U.S.  Patent  707,934.  The  second  relates  to  the  suit 
brought  by  Jesse  Isidor  Straus  and  other  plaintiffs  against  the  Victor  Talking 
Machine  Co.  Both  opinions  became  legal  precedents,  barring  the  license 
agreements  used  by  the  Motion  Picture  Patents  Co.  and  Thomas  A.  Edison, 
Inc.,  to  fix  prices  and  otherwise  limit  the  use  or  sale  of  their  products.  Both 
opinions  contain  marginal  notations,  some  probably  by  Edison. 


SUPREME  COURT  OP  THE  UNITED  STATES. 


No.  715.— October  Term,  1916. 


Motion  Picture  Patents  Company,] 

Petitioner,  Certiorari  to  the  United  States 

vs.  Circuit  Court  of  Appeals  for 

Universal  Film  Manufacturing  the  Second  Circuit.  ■ 

-  Company,  et  al.  J 

[April  9, 1917.] 

Mr.  Justice  Clarke  delivered  the  opinion  of  the  Court.  . 

In  this  suit  relief  is  sought  against  three  defendant  corpora¬ 
tions  as  joint  infringers  of  claim  number  seven  of  United  States' 
letters  patent  No.  707,934  granted  to  IVoodville  Latham,  assignor,  \ 
on  August  26,  1902,  for  improvements  in  Projeeting-Kinetoscopes.'' 
It  is  sufficient  description  of  the  patent  to  say  that  it  covers  a 
part  of  the  mechanism  used  iri  motion  picture  exhibiting  machines 
for  feeding  a  film  through  the  machine  with  a  regular,  uniform 
and  accurafe  movement  and  so  as  not  to  expose  the  film  toexcessive 
strain  or  wear.  '  \ 

The  defendants  in  a  joint  answer  do  not  dispute'  the  title  of 
the  plaintiff  to  the  patent  but  they  deny  the  validity  of  it,  deny*,; 
infringement,  and  claim  an  implied  license  to  use  the  patentee! 
machine. 

Evidence  which  is  undisputed  shows  that  the  plaintiff  on  June 
20]  1912,  in  a  paper  styled  “License  Agreement”  granted  to  The 
Precision  Machine  Company  a  right  and  license  to  manufacture  and 
sell  machines  embodying  the  inventions  described  and  claimed  in 
the  patent  in  suit,  and  in  other  patents,  throughout  the  United 
States,  its  territories  and  possessions.  This  agreement  contains  a 
covenant  on  the  part  of  the  grantee  that  every  machine  sold  by  it, 
except  those  for  export,  shall  bo  sold  “under  the  restriction  and 
condition  that  such  exhibiting  or  projecting  machine  shall'be  used 


2  Motion  Picture  Patents  Co.  vs.  Universal  Film  Mfg.  Co.  et  al. 

of  the  licensor  while  it  owns  said  patents  and  upon  other  terms  to 
be  fixed  by  tlie  licensor  and  complied  with  by  the  user  while  the 
said  machine  is  in  use  and  while  the  licensor  owns  said  patents 
(which  other  terms  shall  only  be  the  payment  of  a  royalty  or 
rental  to  the  licensor  while  in  use).” 

The  grantee  further  covenants  and  agrees  that  to  each  machine 
sold  by  it,  except  for  export,  it  will  attach  a  plate  showing  plainly 
not  only  the  dates  of  the  letters  patent  under  which  the  machine 
is  “licensed,”  but  also  the  following  words  and  figures: 

“Serial  No _ 

“Patented  No. 

“The  sale  and  purchase  of  this  machine  gives  only  the  right  to 
use  it  solely  with  moving  pictures  containing  the  invention  of  re¬ 
issued  patent  No.  12192,  leased  by  a  licensee  of  the  Motion  Picture 
Patents  Company,  the  owner  of  the  above  patents  and  reissued 
patent,  while  .it  owns,  said  patents, .  and  upon  other  terms  to  be 
fixed  by  the  Motion  Picture  Patents  Company  and  complied  with 
by  tl)e  user  while  it  is  in  use  and  while  the  Motion  Picture  Patents 
pompany  owns  said  patents.  ..The  removal  or  defacement  of  this 
plate  terminates  tlie  right  to  use  this  machine.” 

1'ho  agreement  further  provides  that  the  grantee  siiali  hot  sell 
any  machine  at  less  than  the  plaintiff’s  list  price,  except  to  jobbers 
and  others,  for  purposes  of  resale  and  that  it  will  require  such 
jobbers  and  others  to  sell  at  not  less,  than  plaintiff’s  list  price.  The 
price  fixed  in  the  license  contract  for  sale  of  machines  after  May 
1st,  19109,  is  not  less  than  $150  for  each  machine  and  tiio  licensee 
agrees  to  pay  a  royalty  of  $5  on  some  machines  and  a  percentage  of 
the  selling  price  on  others. 

it  is,  admitted  that  the,  machine,  the  use  of  which  is  charged  to 
be  ah  infringement  of  tlie  patent  in  suit,  was  manufactured  by 
The, Precision  Machine  Company  and  was  sold  and.delivered  under 
its  “License  Agreement”  to  the  Seventy-second  Street  Amusement 
bompany,  then  operating  a  playhouse  on .  Seventy-second  Street, 
in  New.  York,  and  that  when  sold  it  was  fully  paid  for  and  had 
attached  toft  a  plate  with  the  inscription  which  we  have  quoted  as 
required  by  the  agreement.  t. 

Reissued  patent  12,192,  referred  io  in  the, notice, attaehed.to  the 
machine,  .expired  on  August ,31,,  i9X4. ,  The  defendant  Prague 
Amusement  Company  on  November  2,  1914,  leased  the  Soventy- 
seebhd  Street  playhouse  f  rom, tlie  Seventy-second  Street  Amusement 
Company,  and  acquired  the  alleged  infringing  machine  as  a  part 


Motion  Picture  Patents  Co.  vs.  Universal  Film  Mfg.  Co.  et  al.  3 

of  the  equipment  of  the  leased  playhouse.  Subsequent  to  the 
expiration  of  reissued  patent  12,192  the  defendant,  Universal  Film 
Manufacturing  Company  made  two  films  or  reels,  which,  between 
March  4th  and  17th,  1915,  were  sold  to  the  defendant  the  Universal 
Film  Exchange  and  on  March  17,  1915,  were  supplied  to  the 
defendant  Prague  Amusement  Company  for  use  on  the  machine, 
acquired  as  we  have  stated,  and  were  used  upon  it  at  the  Seventy- 
second  Street  playhouse  on  March  18th,  1915. 

On  January  18,  1915,  the  plaintiff  sent  a  letter  to  the  Seventy- 
second  Street  Amusement  Company,  notifying  it  in  general  terms 
that  it  was  using  without  a  license  a  machine  embodying  the  inven¬ 
tion  of  patent  No.  .707,934  and  warning  it  that  such  use  constituted 
an  infringement  of  the  patent,  and  on  the  same  day  the  plaintiff 
addressed  a  letter  to  the  defendant  Universal  Film  Exchange 
notifying  it  that  it  also  was  infringing  the  same  patents  by  supply! 
ing  films  for  use  upon  the  machine  of  the  Seventy-Second  Street 
playhouse  and  elsewhere.  The  bill  in  this  case  was  filed  on  March 
18,1915. 

The  District  Court  held  that  the  limitation  on  the  use  of  the 
machine  attempted  to  be  made  by  the  notice  attached  to  it,  after 
it  had  been  sold  and  paid  for,  was  invalid,  and  that  the  Seventy- 
second  Street  Amusement  Company,  the  purchaser,  and  its  lessee, 
the  Prague  Amusement  Company,  had  an  implied  license  to  use  the 
machine  as  it  had  been  used,  and  it  dismissed  the  bill  without 
passing  on  the  question  raised  in  the  pleadings  ns  to  the  validity 
of  the  patent.  The  Circuit.  Court  of  Appeals  affirmed  the  District 
Court  (235  Fed.  398)  and  the  ease  is  here  for  review  on  certiorari. 

It  was  admitted  at  the  bar  that  40,000  of  the  plaintiff’s  mnehines 
are  now  in  use  in  this  country  and  that  the  mechanism  covered  by 
the  patent  in  suit  is  the  only  one  with  which  motion  picture  films 
can  be  used  successfully. 

This  state  of  facts  presents  two  questions  for  decision : 

First:  May  a  patentee  or  his  assignee  license  another  to  manu¬ 
facture  and  sell  a  patented  machine  and  by  a  mere  notice  attached 
to  it  limit  its  use  by  the  purchaser  or  by  the  purchasSPIT lessee,  to 
films  which  are  no  part  of  the  patented  machine,  and  which  are 
not  patented? 

Second.  May  the  assignee  of  a  patent,  which  has  licensed  another 
to  make  and  sell  the  machine  covered  by  it,  by  a  mere  notice  at¬ 
tached  to  such  machine,  limit  the  use  of  it  by  the  purchaser  or  by 


laucr  v.  O  Donnell, 
not  to  bo  doubtful 
they  really  do  not 


10  Motion  Picture  Patents  Co.  vs.  Universal  Film  Mfg.  Co.  et  al. 
vention  described  in  tlie  claims  of  the  patent  and  that  it  is  not  com¬ 
petent  for  the  owner  of  a  patent  by  notice  attached  to  its  machine 
to,  in  effect,  extend  the  scope  of  its  patent  monopoly  by  restricting 
the  use  of  it  to  materials  necessary  in  its  operation  but  which  arc  no 
part  of  the  patented  invention,  or  to  send  its  machines  forth  into  the 
channels  of  trade  of  the  country  subject  to  conditions  as  to  use  or 
royalty  to  be  paid  to  be  imposed  thereafter  at  the  discretion  of  such 


12  Motion  Picture  Patents  Co.  vs.  Universal  Film  Mfg.  Co.  et  al. 

conclusions  we  have  stated  in  this  opinion,  is  plainly  void,  because 
wholly  without  tlio  scope  and  purpose  of  our  patent  laws  and  be¬ 
cause,  if  sustained,  it  would  be  gravely  injurious  to  that  public 
interest,  which  we  have  seen  is  more  a  favorite  of  the  law  than  is 
the  promotion  of  private  fortunes. 

Both  questions  as  stated  must  bo  answered  in  the  negative  and 
tho  decree  of  the  Circuit  Court  of  Appeals  is 
,  Affirmed. 

Mr.  Justice  McReynolds  concurs  in  tho  result. 


SUPREME  COURT  OE  THE  UNITED  STATES. 


No.  715.— October  Term,  1916. 


Motion  Picture  Patents  Company,  1  On  Writ  of  Certiorari  to 
vs.  I  the  United  States  Cir- 

Universal  Film  Manufacturing  Co.,  [  euit  Court  of  Appeals 
et  al.  J  for  tho  Second  Circuit. 

[April  9,  1917.] 

Mr.  Justice  Holmes,  dissenting. 

I  suppose  that  a  patentee  has  no  less  property  in  his  patented 
machine  than  any  other  owner,  and  that  in  addition  to  keeping 
the  machine  to  himself  tho  patent  gives  him  the  further  right  to 
forbid  tho  rest  of  the  world  from  making  others  like  it.  In  short, 
for  whatever  motive,  lie  may  keep  his  device  wholly  out  of  use. 
Continental  Paper  Bag  Co.  v.  Eastern  Paper  Bag  Co.,  210  U.  S. 
405,  422.  So  much  being  undisputed,  I  cannot  understand  why  he 
may  not  keep  it  out  of  use  unless  the  licensee,  or,  for  the  matter  of 
that,  the  buyer,  will  use  some  unpatented  thing  in  connection  with 
it.  Generally  speaking  the  measure  of  a  condition  is  the  conse¬ 
quence  of  a  breach,  and  if  that  consequence  is  one  that  tho  owner 
may  impose  unconditionally,  ho  may  impose  it  conditionally  upon 
a  certain  event.  Ashley  v.  By  an,  153  U.  S.  436,  443.  Lloyd  V. 
Dollison,  194  U.  S.  445,  449.  Non  debet,  cui  plus  licet,  quod  minus 
est  non  liccre.  D.  50, 17,  21. 

No  doubt  this  principle  might  be  limited  or  excluded  in  cases 
where  the  condition  tends  to  bring  about  a  state  of  things  that 
there  is  a  predominant  public  interest  to  prevent.  But  there  is  no 
predominant  public  interest  to  prevent  a  patented  tea  pot  or  film 
feeder  from  being  kept  from  tho  public,  because,  as  I  have  said,  the 
patenteo  may  keep  them  tied  up  at  will  while  his  patent  lasts. 
Neither  is  there  any  such  interest  to  prevent  the  purchase  of  the 
tea  or  films,  that  is  made  the  condition  of  the  use  of  the  machine. 
Tho  supposed  contravention  of  public  interest  sometimes  is  stated 
as  an  attempt  to  extend  the  patent  law  to  unpatented  articles,  which 
of  course  it  is  not,  and  more  accurately  as  a  possible  domination  to 


Motion  Picture  Patents  Cc 

established  by  such  means, 
the  extent  of  the  desire  for  the  tea  pot  or  film  feeder,  and  if  the 
owner  prefers  to  keep  the  pot  or  the  feeder  unless  you  will  buy  his 
tea  or  films,  I  cannot  see  in  allowing  him  the  right  to  do  so  any¬ 
thing  more  than  an  ordinary  incident  of  ownership,  or  at  most,  a 
consequence  of  the  Paper  Bag  case,  on  which,  as  it  seems  to  me, 
this  case  ought  to  turn.  See  Grant  v.  Raymond,  16  Pet.  218,  242. 

Not  only  do  I  believe  that  the  rule  that  I  advocate  is  right  under 
the  Paper  Bag  case,  but  I  think  that  it  lias  become  a  rule  of  property 
that  law  and  justice  require  to  bo  retained.  For  fifteen  years,  at 
least  since  Bement  v.  National  Harrow  Co.,  186  XJ.  S.  70,  88:93,  if 
not  considerably  cnrlier,  the  public  has  been  encouraged  by  this 
Court  to  believe  that  the  law  is  as  it  was  laid  down  in  Heaton- 
Peninsular  Button-Fastener  Co.  v.  Eureka  Specialty  Co.,  25  C.  C.  A. 
267,  and  numerous  other  decisions  of  the  lower  Courts.  I  believe 
that  many  and  important  transactions  have  taken  place  on  the  faith 
of  those  decisions,  and  that  for  that  reason  as  well  as  for  the  first 
that  I  have  given,  the  rule  last  announced  in  Henry  v.  A.  B.  Dick 
Co.,  224  U.  S.  1,  should  be  maintained. 

I  will  add  for  its  bearing  upon  Straus  v.  Victor  Talking  Machine 
Co.,  that  a  conditional  sale  retaining  the  title  until  a  future  event 
after  delivery,  has  been  decided  to  be  lawful  again  and  again  by  this 
Court.  Bailey  v.  Baker  Ice  Machine  Co.,  239  TJ.  S.  268,  272.  X 
confine  myself  to  expressing  my  views  upon  the  general  and  im¬ 
portant  questions  upon  which  I  have  the  misfortune  to  differ  from 
the  majority  of  the  Court.  I  leave  on  one  side  the  question  of  the 
effect  of  the  Clayton  Act,  as  the  Court  has  done,  and  also  what 
I  might  think  if  the  Paper  Bag  case  were  not  upheld,  or  if  the 
question  were  upon  the  effect  of  a  combination  of  patents  sueli  as  to 
be  contrary  to  the  policy  that  I  am  bound  to  accept  from  the 
Congress  of  the  United  States. 


SUPREME  COURT  OE  TIIE  UNITED  STATES. 


No.  374.— October  Term,  1916. 


Jesse  Isidor  Straus,  etal.,  Petitioners,!  Certiorari  to  the  Circuit 
vs.  I  Court  of  Appeals  for  the 

Victor  Talking  Machine  Company.]  Second  Circuit. 

[April  9,  1917.] 

Mr.  Justice  Clarice  delivered  the  opinion  of  the  Court. 

If  will  contribute  to  brevity  to  designate  the  parties  to  this 
proceeding  as  they  were  in  the  trial  court — the  respondent  as 
plaintiff  and  the  petitioners  as  defendants. 

The  plaintiff  in  its  bill  alleges :  that  it  is  a  corporation  of  New 
Jersey;  that  for  many  years  it  has  been  manufacturing , sound- 
reproducing  machines  embodying  various  features  covered  by 
patents  of  which  it  is  the  owner,  and  that,  for  the  purpose  of 
marketing  these  machines  to  the  best  advantage,  about  August 
1st,  1913,  it  adopted  a  form  of  contract  which  it  calls  a  “License 
Contract”  and  a  form  of  notice  called  a  “License  Notice,”  under 
which  it  alleges  all  of  its  machines  have,  since  that  date  been 
furnished  to  dealers  and  to  the  public. 

This  “License  Notice"  which  is  attached  to  each  machine  and 
is  set  out  in  full  in  the  bill,  declares  that  the  machine  to  which  it  is 
attached  is  manufactured  under  patents,  is  licensed  for  the  term  of 
tho  patent  under  which  it  is  licensed  having  the  longest  time  to  run 
and  may  be  used  only  with  sound  records,  sound  boxes  and  needles 
manufactured  by  the  plaintiff ;  that  only  the  right  to  use  the  machine 
“for  demonstrating  purposes”  is  granted  to  “distributors”  (whole¬ 
sale  dealers),  but  that  these  "distributors”  may  assign  a  like  right 
“to  the  public”  or  to  "regularly  licensed  Victor  dealers”  (re¬ 
tailers)  “at  the  dealer’s  regular  discount  royalty”;  that  the 
“dealers”  may  convey  the  “license  to  use  the  machine”  only 
when  a  “royalty”  of  not  less  than  $200  shall  have  been  paid,  and 
upon  the  “consideration”  that  all  of  the  conditions  of  the  “license” 
shall  have  been  observed ;  that  the  title  to  the  machine  shall  remain 


6  Sl™setal.vs.  Victor  ralkin!r  Machine  Co. 
with  the  possession  of  it;  that  it  is  not  t»i»  i 
(  tracing  and  keeping  the  plaintiff  b  USOd  M  a  basis  fc 

A  use  of  the  machine,  for  no  renort  of  ^  03  to  the  c°ndition  e 
/  ,lho ^ultima^..  arf terl  h.Lf^'Tt^  required  fror 
notwithstanding  its  apparently  s*iX7  thoatlPulatcd  price;  thai 
word  “sale-  and  its“£  °f  7°,  US°  of  «*' 

most  obvious  requirements  for  securing  a  JotiAtf/0^  ,US°’” 
the  restrictions  of  the  notice  as  to  “i,  »  a  °°  a  onforcement  oi 
by  its  own  terms,  the  title  to  th.  m„°i  ,arc  °«ntted ;  and  that,  even 
"ultimate  users,”  without  further  payment  “  VCSts  in  the 

except  patiently  waiting  for  patents  to“wire  on  •1°D  ?• tbeir  part- 
eo  far  as  this  notice  shows,  may  or  ivT  “VOntlon3'  which, 
j  machine.  There  remains  for  this  “r?,/  *7  lnCOrporated  in  the 
discover,  the  function  only  of  “  &r  118  we  can 

I  Plaintiff's  machines  to  its  agents  and  to  *•  P^e  of 

V  cannot  doubt  is  the  purpose  for  wl,i  l  V  ,  P"bhc'  and  tws  we 
Courts  would  be  nerveiwlvVr '7*7  reaI  ^  was  designed, 
eueh  an  attempt  ns  this  "L,“ense  nSc”"^  *°  l0°k  tbr°neh 
sell  property  for  a  full  price,  and  vet^o  nf  "S  pl“in*  is  to 

hf F  SSKi 

scheme  of  distribution  is  not  ,S  t°,t‘.°  PnM“»  interest.  The 
Plaintiff  and  to  the  public  a  reasonahT  deS,f?d  to  “cure  to  the 
tile  grant  of  tile  patent  laws  but  is  in  w  °f  ltS  machines,  within 
price-fixing  enterprise,  ,’S  ill*  *2 "l*™  “nd  in  fa“  a  more 
widespread  injustice  to  innocent  puiehS  foT>  W°rk  ",,d 

mzed  that  not  one  pimdmscr  f  14  must  bc  rccog- 

and  that  ^°t'onelir^^ml^reS^^^r^~TA^^~St,i!'^-~£2Ei™> 
1101  n,,mh"”  -fjie  did  renrlif 


oIoar  its  real  meaning  ”nd  pm™se°  “■“•‘'than  to  mafe 

•terms  to  call  the  transaction  Intended  to  1,"°“  f  v  °  pcrvcrsion  01 
Of  marketing  plaintiff's  machines  1  “MeenseTo  ?.  I,1"-*'"8  SySte“ 
Bmcr  v.  O'Donnell,  229  U  S  1  IP  ‘  SC  the  invention." 

Convinced  ns  wo  are  «,„/«  '  ’ 

Notice"  Of  plaintiff,  eonS*dasS  17  °f  this  “^nse 
its  product,  is  not  to  secure  to  tl»  l“  ltS  scllcme  for  marketing 
and  as  is  contemplated  by  the  patent's?  t  “S°  °f  its  machines, 
poorly-concealed  purpose  is  to  restrict  «  “’•  bUt  tllBt  its  reaI  “ml 
plaintiff  had  been  paid  for  ST2? 


Straus  et  al.  vs.  Victor  Talking  Machine  Co.  7 

the  possession  of  dealers  and  ofjlm  imbUe,  we  conclude  that  it  falls 
within  the  principles  oF Adorns  v.  Burlee,  17  Wall.  453,  4  , 

and  of  Tinner  V.  O’Donnell.  229 II.  S,  lj.  that  it  is,  therefore,  invalid, 
and  tkoTthe  District  Court  properly  held  that  the  bill  must  fail 

’it^ults^thaT'the  decree  of  the  Circuit  Court  of  Appeals 
, _ .1  n,»t  flic  District  Court  affirmed. 


Legal  Department  Records 
Motion  Pictures  -  Case  Files 

Richard  F.  Outcault  v. 

Edison  Manufacturing  Company  and  Percival  L.  Waters 

This  folder  contains  material  pertaining  to  the  suit  brought  by  cartoonist 
Richard  F.  Outcault  against  the  Edison  Manufacturing  Co.  and  Percival 
Waters  of  the  Kinetograph  Co.  in  the  U.S.  Circuit  Court  for  the  Southern 
District  of  New  York.  The  case  was  initiated  in  April  1904  and  involved  the 
alleged  infringement  of  Outcault's  copyright  for  his  Buster  Brown  cartoon. 
The  selected  items  include  an  Outcault  cartoon  and  a  description  of  a  motion 
picture  based  on  the  cartoon,  along  with  the  bill  of  complaint  and  affidavits  by 
Waters  and  Edwin  S.  Porter.  Among  the  items  not  selected  are  the 
defendants'  demurrer  to  the  bill  of  complaint,  the  motion  for  dismissal,  letters 
and  memoranda  pertaining  to  the  progress  of  litigation,  and  documents  that 
duplicate  information  in  selected  material. 


The  Kinetograrh  Company 


Characters  and  scenes  in  Buster  Brown  picture. 


1st.  scene, 


4th.  scene 


5th. 


Outcault  making  a  sketch  of  Buster 


Busters  Revenge  on  the  Tramp.  Buster,  Cook,  &  Tramp, 


Buster  &  the  Dude.  Buster,  2  young  Ladies,  Young  Man  with 
a  dog,  Tige.  I  , 

Buster  makes  room  for  his  Mama  at  Bargain  Counter.  Salesman, 
a  number  of  young  ladies,  Buster  comes  in  with  Tige  and 
Mama,  Tige  sits  on  stool,  Buster  whispers  to  Tige. 

Busters  Joke  on  Papa.  Kitchen  scene,  Cook,  lobster  Man, 

Mama,  Buster,  Tige.  Bed-room  scene,  papa  sitting  in  chair, 
Papa  goes  out,  Buster  comes  in  with  Lobers  puts  them  in 
Bed,  papa  comes  back  goes  to  bed,  in  comes  Buster  and  Mama 
another  scene,  Buster  eating  with  Mama  |J,LA-L'5— 

UiTsEers  Dog  to  the  Rescue.  Cook,  Buster,  Mama  and  Tige. 
Cooks  puts  CruHllers  on  shelf,  Buster  tries  to  go  up  by 
ladder,  Mama  comes  in,  ties  Buster  to  chair,  tige  comes  in 
climbs  ladder  and  gets  crullers  and  eats  with  Buster. 


Buster  &  Tige  put  a  Baloon  Vender  out  of  Business.  Mama, 
Tige,  and  Bustfer,  four  other  Dogs,  Balloon  Man.  Balloon 
man  walkingnin  street,  Mama  &  Buster  come  along,  Buster 
bunks  into  Balloon  man,  and  is. struck  by  the  latter,  then 
in  runs  tige  and  jumps  at  the  Balloon  man  and  four  o'.her 
gogs .  end . 


a 


0-.3 


I 


Circuit  Court  of  the  United  States. 

,  : 

Southern  District  of  Now  York. 

In  Equity. 

) 

Richard  F.  Outcault,  ) 

Complainant ,  ) 

against  )  Bill  of  complaint. 

The  Edison’ Manufacturing  Company  ) 

■j  > 

) 

i  Circuit  Court  of  tlie  United  States, 

defendants.  ) 

for  the  Southern  District 

of  New  York, 

To  the  judges  of  the  Circuit  Court  of  the  United 

Richard  F?  Outcault, 

;  / 

States  for  the  Southern  District  of  New  York,  in  the  Equity 

;  Complainant, 

Circuit . 

v.  ' 

Richard  F.  Outcault  of  Flushing,  Long  Island, 

l|  The  Edison  Mfg.  Co.  et.  al. 

t^r.K-r 

and  a  citizen  of  the  State  of  New  York,  brings  this  bill 

Defendants. 

;i 

against  The  Edison  Manufacturing  Company,  a  corporation 

organized  under  the  laws  of  the  State  of  New  Jersey,  and 

Fercival  L.  Natters,  doing  business  in  the  City  of  New  York 

■ 

1  (Copy.) 

Bill  of  Complaint. 

under  the  name,  firm  and  style  of  The  Kinetograph  Company, 

and  thereupon  your  orator  complains  and  says:- 

That  Richard  F.  Outcault  is  a  citizen  of  the 

United  States  and  is  the  true  and  original  author , designer 

1 

% 

and  proprietor  of  a  series  of  pictures,  sketches  and  car¬ 

d 

toons  collectively  designated  and  known  by  the  name  and 

■  *jtsJ 

title  of  "  Buster  Brown" ,  which  said  design,  sketch  or  car¬ 

toon  was  not  known  or  used  by  others,  before  the  origin, 

invention,  discovery  and  design  thereof  by  the  said  Richard 

F.  Outcault. 

That  the  said  Richard  F.  Outcault  on  or  about  the 

25th  day  of  May,  1902,  before  an  application  for  a  copy¬ 
right  on  said  name,  design,  picture  and  cartoon  of  Buster 
Brown, had  been  made,  for  valuable  consideration  duly  as¬ 
signed  his  right,  title  and  interest  and  license  to  manu¬ 
facture,  use  and  vend  the  said  article  etc.  to  the  New  Yorlc 
Herald  Company. 

That  the  said  New  York  Herald  Company  thereupon 
afterwards  before  publication  did  deposit  in  the  mail  ad¬ 
dressed  to  the  Librarian  of  Congress,  at  Washington,  Dis*r;> 
trict  of  Columbia,  a  printed  copy  of  the  title  of  the  de- 
sign,  picture,  sketch  or  cartoon  known  as  Buster  Brown, 
and  within  ten  days  of  the  publication  thereof,  did  deposit 
in  the  mail  addressed  to  the  Librarian  of  Congress,  at 
Washington,  District  of  Columbia,  two  copies  of  such  copy¬ 
right  article. 

That  the  Librarian  of  Congress  duly  recorded  tho 
name  of  such  copy  right  articles,  in  a  book  kept  for  that 
purpose,  and  duly  received  his  fees  for  the  same,  and  tho 
New  York  Herald  Company  having  fully  and  in  all  respects 
complied  with  all  requirements  of  the  law  in  that  behalf, 
and  within  ten  days  after  its  publication  having  filed  two 
copies  of  said  design,  sketch,  or  cartoon,  known  as  Bustor 
Brown,  with  the  Librariad  oil  Congress  who  duly  issued  his 
certificate  of  Copyright  of  the  said  (in  or  about  the  25th 
day  of  May,  1902,  and  on  or  about  the  said  25th  day  of  May 
1902,  and  by  virt«ie  thereof  the  said  New  York  Herald  Com¬ 
pany  became  and  were  the  sole  owners  of  all  the  rights 
and  privileges  granted  and  secured  in  or  intended  to  be  se¬ 
cured  In  and  by  said  copyright,  as  by  reference  to  the 


certi Cl  cate  thereof  will  more  fully  appear. 

And  your  orator  further  shows  unto  your  Honors 
that  on  the  1st  day  of  October,  190?,,  the  said  Hew  York 
Herald  Company  by  theirmassignraent  of  that  date  duly  ex¬ 
ecuted,  for  valuable  consideration,  conveyed  to  your  or¬ 
ator  all  their  rights,  title  and  interest  in  and  to  the 
design,  sketch  and  cartoon  secured  by  the  said  copyright 
and  with  the  exclusive  rights  and  license  therein  to  man¬ 
ufacture  use  and  vend  the  copy  righted  articles,  during 
the  unexpired  term  of  said  copyright, and  of  all  extentionc 
and  renewals  thereof,  as  by  the  said  instrument  here  in 
court  to  be  produced,  if  required,  will  more  fully  appear. 

And  your  orator  further  shows  that  he  is  in  tho 
full  enjoyment  of  the  rights  and  interests  acquired  by  him 
as  aforesaid,  and  that  said  rights  and  interests  have  boon 
and  are  of  great  value  to  your  orator,  and  your  orator  is 
entitled  to  all  the  damage  occasioned  by  the  infringements 
of  the  said  copyright  by  the  manufacture,  sale  or  use  of 
the  name,  sketch/  design  etc. , known  as  Buster  Brown,  mado 
in  violation  of  the  said  copyright  and  is  by  law, entitled 
to  sue  for,  and  receive  the  same  to  his  own  use. 

And  your  orator  further  shows  unto  your  Honors, 
that  he  believes,  and  therefore  charges  the  fact  to  be  that 
he,  the  said  Richard  R.  Outcault,  was  the  originator  and 
first  designer,  sketcher  and  cartoonist  ofthe  name,  sketch, 
and  design,  copyrighted  by  him  as  aforesaid,  and  known  as 
Buster  Brown,  and  described  and  claimed  in  the  said  copy¬ 
right  a  s  aforesaid,  and  that  the  same  was  not  known  or  use  is 


by  any  other  persons  before  the  authorship  and  origin  by 
him,  the  said  Richard  V?  Outcault. 


And  your  orator  further  shows  unto  your  Honors, 
that  since  on  or  about  the  14th  day  of  March,  1904,  the 
defendants  w411  knowing  the  premises  and  the  rights  and 
privileges  secured  to  your  orator,  the  said  Richard  F.  Dut- 
cault,  by  the  said  copyright,  but  contriving  to  injure 
your  orator  and  to  deprive  him  of  the  profits,  benefits 
and  advantages  which  might  otherwise  have  accrued  to  him  at 


the  city  of  New  York,  within  the  District  aforesaid,  and 
at  other  places,  have  unlawfully  and  wrongfully  made  or  use 
or  sold  ordexhibited,  and  are  now  unlawfully  and  wrong¬ 
fully  making  or  using  or  selling  or  exhibiting  large  quan¬ 
tities  of  machinery,  contrivances,  films  etc,  for  the  ex¬ 
hibition  of  pictures,  sketches  and  cartoons  of  Buster 
Brown,  so  copyrighted  by  the  New  York  Herald  ?oandrg§ signed 


to  your  orator,  and  also  making  using  or  selling  large 
quantities  of  pictures,  sketches  and.  cartoons,  known  as 
Buster  Brown,  and (described  and  claimed) in  said  copyright, 
and  for  tho  purposes  specified  in  said  copyright,  and  in 
violation  of  the  exclusive  privileges  therein  and  thereby 


granted  to  your  orator  as  aforesaid,  and  in  infringement  of 


said  copyright,  and  of  the  claims  therein  contained;  but 
what  quantity  of  the  things  copyrighted, produced  as  here¬ 
inbefore  referred  to ,  the  said  defendants  have  made  or 
used  or  sdld,  or  exhibited  your  orator  does  not  know  and 
cann  ot  state, but  upon  information  and  belief  your  orator 
avers  that  they  have  made  or  used  or  sold  large  quantitios 
e,  and  are  now  making  or  using  or  selling  largo 


of  the  f 


quantities  of  the  same  and  that  they  have  derived  and  re¬ 
ceived  and  ares till  deriving  and  receiving,  from  such  man¬ 
ufacture, ’.ise  and  sale  great  gains  and  profits,  but  to  what 
amount  your  orator  is  ignorant  and  cannot  set  forth,  but 
your  irator  believes  the  same  to  be  the  full  amount  of 
five  thousand  dollars,  and  so  charge  the  fact  t  be,  and 
prays  that  the  defendant  may  be  required  to  make  a  dis¬ 
closure  of  all  such  gains  and  profits- 

And  your  orator  further  avers  that  the  defend¬ 
ants  continue  to  make  or  use,  or  sell  or  exhibit  such  pic¬ 
tures,  sketches  and  cartoons  and  designs  of  Buster  Brown, 
and  machinery,  contrivances,  films  etc,  for  the  manufac¬ 
ture,  use  or  sale  of  the  same,  and  refuse  though  warned  and 
requested,  to  desist  from  such  manufacture,  use  and  sale, 
and  exhibitions,  or  to  pay  to  your  orator  such  gains  and 
profits,  by  means  whereof  the  defendants  have  injured  and 
are  still  greatly  injuring  your  orator,  arid  have  deprived 
and  are  still  depriving  your  orator  of,  andhave  prevented 
and  are  still  preventing  your  orator  from  receiving  the 
gains  and  profits  from  the  use  of  the  exclusive  right  to 
use  the  pictures,  design,  sketch  and  cartoon  known  as  Bus¬ 
ter  Brown,  claimed  in  said  copyright  which  your  orator 
otherwise  and  but  for  the  said  wrongful  acts  and  infringe¬ 
ments  of  the  said  defendants  would  have  obtained  and  re¬ 
ceived. 

And  your  orator  prays  that  the  said  defendants 
may  be  compelled,  by  decree  of  this  court,  to  account  for  a 
and  pay  over  to  your  orator  all  such  gains,  profits  as  have 
accrued  or  arisen  to,  or  been  earned  or  received  by  the  de- 


fenrlants,  or  to  which  they  my  be  entitled  by  reason  of 
such  unlawful  manufacture  and  use  and  sale  and  exhibition 
by  them  of  such  pictures,  sketches,  carto-ns  and  designs, 
manufactured  in  accordance  with  the  designssof  said  copy¬ 
right, and  all  such  gains  and  profits  as  your  orator  would 
have  received  but  for  the  said  unlawful  acts  and  doings 
and  infringements  of  the  said  defendants. 

And  may  it  please  your  Honors,  the  premises  con¬ 
sidered,  to  grant  unto  your  orator  the  writ  of  injunction 
issuing  out  of  and  under  the  seal  of  this  Honorable  court, 
or  issued  by  one  of  your  Honors  according  to  the  form  of 
the  statute  in  such  case  made  and  pi’ovlded,  perpetually 
enjoining  and  restraining  the  said  defendants,  their  clork: 
attorneys, agents, ,  servants,  workmen  and  employees,  from 
directly  or  indirectly, making  or  using  or  selling  or  exhib¬ 
iting  to  others  any  pictures,  sketches, design  or  cartoon 
of  Buster  Brown,  described  and  claimed  in  the  said  copy- 
rlght,  or  any  machinery,  contrivance  or  film  for  the  man¬ 
ufacture  of  any  picture,  design  or  cartoon  known  as  Bus¬ 
ter  Brown,  as  d e s cribed., in~sai d—  copyright,. 

And  may  it  please  your  honors  to  grant  to  your 
orator  a  provisional  or  preliminary  injunction  issuing  out 
of  and  under  the  seal  of  this  honorable  court,  enjoining  a: 
and  restraining  the  defendants,  their  attorneys,  clerks, 
agents,  servants,  workmen  and  employees,  and  each  and  evorj 
of  them  during  the  pendency  of  the  suit  and  to  the  same 
purport,  tenor  and  effect  herein  before  prayed  for  in  re¬ 
gard  to  said  perpetual  injunction. 


And  that  your  orator  may  have  such  further  or 
other  relief  fin  the  premises  as  the  nature  of  the  cir¬ 
cumstances  of  this  case  may  require  ancl  to  this  honorable 
court  may  seem  meet. 

And  may  i t  please  your  honors  to  grant  unto  your 
orator  a  writ  of  subpoena  of  the  United  States  of  America 
issuing  out  of  and  under  the  seal  of  this  Honorable  Court, 
directed  to  the  said  defendants,  commanding  them  on  a  day 
certain  therein  to  be  named,  and  under  a  certain  penalty 
to  be  and  appear  in  this  Honorable  Court,  then  and  there 
to  answer  all  and  singular  the  premises,  and  to  stand  to, 
perform  and  abide  such  further  order,  direction  and  decree 
as  may  be  made  against  them. 

And  your  orator  aslln  duty  bound  will  ever  pray  & 
Leon  Raunheim: , 

Solicitor  for  complainant. 


Leon  Raunheim, 


Of  counsel  for  complainant. 


United  States  of  America. 

Southern  District  of  Hew  York.  SS:- 

Richard  F.  Outcault,  being  duly  sworn,  deposoth 
and  saith  that  he  is  the  complainant  in  the  foregoing  bill 
named,  and  has  read  the  same,  and  knows  the  contents  there¬ 
of.  That  the  said  bill  is  true  of  his  own  knowledge  ex¬ 
cept  as  to  those  matters  which  are  therein  stated  to  bo  on 
his  information  and  belief,  and  as  to  those  he  believes  it 
to  be  true. 


4 


Sworn  to  before  me  this  30  day  of 

April,  1904.  R.  P.  Outcault. 

J.  Sherman  Moo  1  ton, 

Notary  Public  187  N.  Y.  County. 

(Seal. ) 

(Endorsed. ) 

Circuit  Court  of  the  United  States.  Southern 
District  of  New  Yok.  Richard  P.  Outcault,  complainant, 
against  The  Edison  Manufacturing  Company  and  Kinetograph  Co. 
Company,  defendants.  Bill  of  Complaint.  Leon  Raunheim, 
solicitor  for  complainant,  38  -  44  Court  Street,  Brooklyn, 
N.  Y.  U.  s.  Circuit  Court.  Piled  May  C,  1904.  South¬ 
ern  District.  New  York.  John  A.  Shields,  Clerk. 


Outoault' vs.  Edison  Mfg.  0o« 


J.  R.^SchermerhOrn ,  Esq,, 

^j/1  Edison  Manufacturing  Co, 


\  '  n  Your  favor  of | the  7th  inst,  haB  been  received  with 
let/ter  and.  enclosure  from  Mr.  Dolheer,  and  1  am  giving  this  matter 
proper  attention^, 

/j  I.  lii>  view  of, Mr.  Outcault's  apparently  unfriendly  pos- 
it^nTand  of  hijs;  failure  to  appreciate  the  disinterested  nnturte  of 
our  efforts  to1 ^relieve  him  of  embarrassment ,  1  advised  Mr.  Moore 
tO/go  ahead  w^Lth  the  "Buster  Brown"  f  lifts.  I  requested  |pim,  how¬ 
ever,  to  withhold  the  sale  of  the  "Buster  Brown  in  a  Department 
-Store"  film'  until  I  could  compare  it  with  the  original  copyrighted 
picture.  -To  thiB  end,  I  asked  Mr;  Porter  to  have  Mr.  Smith  make  a 
photograph  "o f  the  original  Outcault  picture  in  the  New  York  Herald, 
and  I  am  daily  expecting  thiB  in  order  that  I  can  compare  the  pic- 


Youtb  very  truly, 


■sxri  '/m.  , ;  ■ 


RICHARD  E.  OUTCAULT, 

Complainant, 


. = . against . . . 

THE  EDISON  MANUFACTURING  COMPANY 
and  PERCIVA1  L.  WATERS, 

Defendants. 


(Copy) 

AI’EIDAY.IT,...OE....PERCiyAL.„.L......WAT.ERS. 


FRANK  E.  BRADLEY, 


CIRCUIT  COURT  OE  THE  UNITED  STATES, 

SOUTHERN  DISTRICT  OE  NEW  YORK. 

. * 

RICHARD  E.  OUTCAULT ,  ) 

Complainant,  ) 

) 

-  against  -  ) 

)  IN  EQUITY. 

THE  EDISON  MANUFACTURING  COMPANY  ) 
and  PERCIVAL  L.  WATERS,  ) 

Defendants.  ) 

) 


UNITED  STATES  OE  AMERICA  ) 

STATE  OE  nm  YORK  )  BB. 

COUNTY  OE  I'UW  YORK.  ) 

PERCIVAL  L.  WATERS,  being  duly  sworn ,  on  oath 
states  that  he  is  one  of  the  defendants  herein;  that  his 
business  is  that  of  selling  machines,  films,  eto.  for  moving 
pictures  und  exhibiting  moving  pictures;  that  ho  has  a 
place  of  business  located  at  41  East  21st  Street,  New  York 
City;  that  he  purchases  his  said  goods  from  the  Edison 
Manufacturing  Company;  affiant  states  that  he  has  read  the 
bill  of  complaint  filed  herein  and  denies  that  he  has  ever 
copied  or  attempted  to  copy  or  made  any  colorable  imitation 
of  the  alleged  copyrighted  article  described  or  attempted  to 
be  desoribed  in  the  said  bill  of  ooraplaint;  he  also  denieB 
that  he  has  ever  made,  used  or  sold  or  exhibited  any 
machinery ,  contrivances,  film,  eto.,  for  the  exhibition  of 
piotures,  sketches,  cartoons  alleged  to  be  copyrighted  in 
said  bill  of  complaint,  nor  is  he  now  making,  using  or 
selling  any  pictures,  sketches,  and  cartoonB  described  and 
claimed  in  the  alleged  copyright  mentioned  in  said  bill  of 
complaint  ; 

Affiant  further  states  he  has  read  the  affidavit  of 

:  plaintiff  filed  herein  dated  April  30th,  1904;  he  denies 

.  that  the  said  Rising  therein  mentioned  ever  was  v.  i 

h.ls  agent 


-  2  - 

or  in  his  behalf  approached  plaintiff  for  the  purpose  of 
making  any  representations  whatsoever,  nor  did  affiant  have 
any  knowledge  of  the  faot  that  the  said  Rising  was  going  to 
see  plaintiff  at  the  time; 

Affiant  also  denies  that  ha  ever  admitted  to 
plaintiff  that  any  arrangements  whatever  had  not  been  made 
with  Mr.  Raymond  as  alleged  in  the  said  affidavit;  in  fact, 
the  first  intimation  affiant  had  that  there  was  any  one  by 
the  name  of  Raymond  connected  in  the  matter,  oame  from 
plaintiff  himself  at  a  conversation  had  about  the  first  of 
April  with  plaintiff  when  affiant  learned  for  the  first  time 
that  there  was  such  a  person  by  being  told  of  the  fact  by 
plaintiff  himself. 


Subscribed  and  sworn  to  ) 

) 

before  me  this  20th  day  ) 
of  May,  1904.  ) 

J}[.  (Z. 


CIRCUIT  COURT  OF  THE  UNITED  STATES, 
SOUTHERN  DISTRICT  OE  NEW  YORK. 


IN  EQUITY. 

CIRCUIT  COURT  OE  UNITED  STATES 
SOUTHERN  DISTRICT  OF  NEW  YORK. 


RICHARD  F.  OUTCAULT, 

Complainant, 


. j= . against . — . . 

THE  EDISON  MANUFACTURING  COMPANY 
and  PERCIVAL  L.  WATERS, 

Defendants. 


..  AFFIDAYI  T....OF....EDWIN....S  .....PORTER ... 


FRANK  E.  BRADLEY. 

ATTORNEY  AND  COUNSELLOR  AT  LAW, 
DUN  BUILDINQ,  Q90  BROADWAY, 


RICHARD  F.  OUTCAULT,  ) 

Complainant,  ) 

-  against  -  ) 

THE  EDISON  MANUFACTURING  COMPANY  ) 

and  PERCIVAL  L.  WATERS,  ) 

Defendants .  ) 

) 


-i 


IN  EQUITY. 


i  UNITED  STATES  OF  AMERICA  ) 
n  STATE  OF  NEW  YORK  )  SS. 

COUNTY  OF  NEW  YORK  )  ! 

EDWIN  S.  PORTER,  being  duly  sworn,  on  oath 
!  states  that  he  is  employed  by  the  Edison  Manufacturing 
;!  Company,  one  of  the  defendants  herein  as  a  Photographer  to 
j!  take  pictures  for  the  Kinetosoope;  affiant  states  that  he  j 
j|  has  read  the  Bill  of  Complaint  filed  herein,  and  of  his 
|  knowledge,  and  he  be  lieves  he  is  iB  a  position  to  know  it  to 
j!  be  a  fact,  that  the  said  Edison  Manufacturing  Company  have 
jl  never  copied  or  attempted  to  copy  or  make  any  colorable 
jj  imitation  of  the  alleged  copyrighted  article  described  or 
attempted  to  be  described  in  the  said  Bill  of  Complaint,  and 
ax  that  they  havenever  made,  used  or  sold  or  exhibited  any  j 
machinery,  contrivances,  film,  etc.  for  the  exhibition  of 
pictures,  sketches,  cartoons  alleged  to  be  copyrighted  in 
said  bill  of  complaint,  nor  are  they  now  making,  using  or 
selling  any  pictures,  sketches,  and  cartoons  described  and 
claimed  in  the  alleged  copyright  mentioned  in  said  bill  of 
complaint ; 

Affiant  further  states  that  he  has  read  the  affidavit 
of  plaintiff  filed  herein  dated  April  30th,  1904,  and  denies 
the  statementtherein  made  that  the  said  Will  S.  Rising 
referred  to  was  an  agent  of  the  Edison  Manufacturing  Company; 
affiant  states  that  the  said  Rising  had  been  employed  by  him 


j  and  aot 

I  to  pose^in  various  pictures  from  time  to  time,and  that  one 
I  day  said  Rising  suggested  to  affiant  that  as  he  was  an  uncle 
of  the  said  plaintiff  he  might  he  able  to.  secure  plaintiff's 
consent  to  the  construction  of  a"Buster  Brown"  film;  the 
suggestion  arose  with  the  said  Rising  and  affiant  told  him 
if  he  could  obtain  this,  it  might  be  worth  his  while; 
thereupon,  Rising  went  away  and  returned  shortly  with  a 
communication  in  plaintiff's  handwriting  of  which  the  fol¬ 
lowing  is  a  copy: 

"Wednesday 

"March  2nd  1904 

"Mr.  Ed  Porter 

"Manager  Kinetograph  Co. 

"Dear  Sir 

"You  have  my  permission  to  use  Buster  Brown  on 
"the  machine-  and  I  will  be  in  early  next  week  and  pose 
"for  you  in  the  aot  of  drawing  Buster  if  you  like. 

"Most  Sincerely  Yours, 

"R.  E.  Outcault" 

Up  to  this  time,  affiant  never  had  heard  of  any  one 
by  the  name  of  Raymond  in  this  matter,  nor  did  he  know  that 
there  was  a  "Buster  Brown"  show  on  the  road;  a  few  days 
thereafter,  plaintiff,  on  his  own  suggestion,  came  to 
affiant's  gallery  and  posed  for  the  opening  scene  of  the 
"Buster  Brown"  film;  several  conversations  were  had  with 
plaintiff  in  which  plaintiff  expressed  not  only  his  willing¬ 
ness  but  his  pleasure  over  the  idea  of  having  the  film 
publicly  exhibited,  not  only  for  the  advertisement  of  the 
character  of  "Buster  Brown"  but  also  for  whatever  advantage 
there  might  be  in  it  to  the  said  Rising;  plaintiff  said 
among  other  things  on  more  than  one  occasion  that  Rising  was 
in  financial  difficulties  and  that  whatever  Rising  got  out 
of  it,  he  would  be  satisfied  with; 

Affiant  further  stateB  that  the  film  axdx  thereupon 


-  3  - 

was  made  up  and  perfected  and  exhibited  to  the  public  with  the 
knowledge  and  permission  of  the  plaintiff,  the  said 
representations  as  shown  on  the  screen  being  original  in 
idea  and  entirely  dissimilar  in  every  respect,  not  only  as 
to  characters,  scheme,  etc.,  from  the  alleged  copyrighted 
article  mentioned  in  the  said  bill  of  complaint. 


Subscribed  and  sworn  to  ) 
before  me  this  20th  day  ) 
of  May,  1904.  ) 


///. 


notaky  pubuc, 

COUNTY  Of  NEW  YORK! 


Memo,  for  Waters'  .Affidavit 


"  After  that  understanding  that  Rising  was  posing  in 
moving  pictures  for  the  Edison  company,  something  was  later 
said  about  his  having  made  an  arrangement  with  Outcault  for 
the  making  of  a  series  of  "Buster  Brown"  pictures.  The  idea 
of  a "Buster  Brown"  film  originated  with  Porter  and  Rising 
suggested  that  he  could  get  Outcault' s  permission  on  account 
'of  his  relationship.  No  knowledge  was  had  at  this  time  by 
either  Waters  or  Porter  that  Outcault  had  parted  with  any  of 
his  rights  whatever  that  were  in  the  name  "Buster  Brown" 
or  the  copyrighted  cartoons.  (It  was  Rising’s  own  idea  of 
going  to  Outcault  to  get  the  permission)  .  Porter  suggested 
to  Rising  that  he  would  make  it  worth  his  while  if  he  got  the 
permission  from  Outcault. 

"The  next  I  heard  of  the  "Buster  Brown"  pictures 
was  one  day  when  Mr.  Outcault  came  in  my  office  and  said  that 
he  had  just  been  up  i>n  the  Gallery  posing  for  the  opening 
i  strip  of  the  "Buster  Brown"  film  (Ascertln  this  date).  He 
was  very  much  interested  in  the  natter  and  suggested  that  he 
would  be  very  glad  to  do  anything  for  the  Edison  people  that 
he  could  in  posing  for  pictures.  He  said  he  expected  no 
compensation  for  himself —  whatever  arrangement  was  made  with 
Rising  was  all  right.  He  said  the  "Buster  Brown"  subject 
;  was  such  a  populat  one,  he  had  no  doubt  the  pictures  would 
make  quite  a  hit  in  the  kinetograph  and  that  he  would  be 
|  interested  to  see  his  own  picture.  He  said  if  he  could  get 
j  up  something  else  later,  he  would  be  glad  to  do  it. 

The  day  of  thiB  conversation  was  the  first  time 
|  affiant  had  met  plaintiff  since  they  had  formerly  met  in 
Paris  in  1399,  and  there  v/as  sort  of  a  talking  over  of  old 
times.  Outcault  also  stated  that  he  knew  Mr.  Edison  very 
!  wel1  and  had  met  him  in  Pxk±  Europe  and  was  personally  with 
Mr.  Edison  quite  often  in  Paris,  and  for  that  reason  he  was 


-  2  -  '' 

very  glad  to  Tie  c.f  any  assistance  to  Mr.  Edison  or  his 
interests. 

The  next  thing  affiant  heard  in  connection  v/ith  the 
matter  was  a  letter  received  from  Mr.  Prank  W.  Sanger  dated 
March  28th,  1904.  "On  the  same  date,  plaintiff  called  to  see 
Mr.  Porter  and  dropped  in  my  office  stating  that  he  had  been 
informed  ilrac  of  considerable  trouble  about  the "Bus ter  Brown" 
pictures;  that  it  would  seem  he  had  given  the  right  of  these 
pictures  to  some  theatrical  concern  whose  name  was  not  then 
disclosed  by  plaintiff.  I  told  him  that  I  very  much  regret¬ 
ted  any  trouble  as  I  felt  we  7/ere  old  acquaintances  and  it 
seemed  too  bad  any  false  move  of  his  should  have  been  embarr¬ 
assing  to  him  and  that  if  there  was  anything  in  the  matter 
I  could  do  I  would  be  only  too  glad  to  do  it,  and  he  then 
suggested  that  I  see  Mr.  Raybond  whom  he  claimed  had  the 
rights  from  Mr.  Sanger  (This  is  the  first  time  affiant  ever 
heard  of  Baymond  in  connection  v/ith  this  matter).  I  asked 
him  then  ,  who  is  Mr.  Raymond,  and  he  said  he  is  the  one  who 
has  the  "Buster  Brown"  show  out  and  is  president  of  the 
Morgan  &  Wright  Lithographing  Co.  He  suggested  that  I  Bee 
Mr.  Raymond  and  I  told  him  at  the  time  it  was  impossible  to 
get  out  of  the  office,  but  I  would  meet  him  later  on  when  I 
could.  He  said  he  was  going  to  Mr.  Raynond’s  office 
immediately  and  in  the  course  of  a  short  time  would  call  me 
on  the  ’phone .  He  said  that  he  had  talked  with  Mr.  Raymond 
in  the  mal:ter  who  was  very  liberal  in  his  views  and  was 
willing  to  talk  the  natter  over  with  the  view  of  effecting 
some  satisfactory  arrangement  regarding  the  pictures  so  as 
not  to  embarrass  him  in  the  contract  which  he  had  with 
|  Raymond.  He  called  me  on  the  telephone  a  little  later  and 
;  said  that  Mr.  Raymond  would  see  me  at  an  hour  named. 

| Pursuant  to  that  arrangement,  I  called  at  Mr.  Raymond's  office 
and  talked  the  matter  over  with  him  and  he  stated  that  he  had 
the  exclus ive  rights  from  Outcault  and  that  the  pictures  had 
been  made  without  his  knowledge,  further  claiming  that  his 


-3“ 

rights  were  being  infringed.  I  asked  him  if  he  had  any 
suggestions  to  make  with  regard  to  the  pictures  and  he  said 
none  whatever,  and  X  then  asked  him  if  it  were  possible  for 
the  owners  of  the  pictures  to  suggest  a  royalty  basis  to 
me .  He  said  he  would  think  the  matter  over  and  asked  me  to 
call  at  a  later  date.  X  then  called  by  appointment  about 
two  days  after.  Mr.  Raymond  stated  he  had  thought  the  matter 
over  and  decided  the  pictures  mjist  not  be  exhibited.  I 
asked  him  to  give  me  this  in  writing,  which  he  did  in  the  form 
of  a  letter  dated  April  2nd,  1904.  Mr.  Raymond  told  me  that 
he  had  exclusive  rightB  to  "Buster  Brown"  and  I  then  suggested 
it  was  rather  queer  that  Mr.  Outcault  should  have  gone  ahead 
with  the  arrangement  which  he  had  made  with  Mr.  Porter. 

Mr.  Raymond  then  laughingly  remarked  that  if  Outcault  were 
up  on  legal  matters  he  would  probably  not  be  a  good  cartoon¬ 
ist.  X  told  Mr.  Raymond  I  was  very  sorry  we  could  not  come 
to  an  arrangement  so  far  as  I  was  concerned  and  that  until 
the  matter  was  finally  adjusted  I  would  give  Outcault  what 
assistance  I  could  in  light  of  the  embarrassing  situation  he 
was  in  between  the  two  parties. 

At  the  time  X  had  five  or  six  sets  of  the  film,  and 
immediately  discontinued  the  use  of  them  temporarily  which 
was  considerable  financial  loss. 

Affiant  further  states  that  he  expressly  stated  to 
the  plaintiff  that  he  would  stop  using  the  pictures  as  a 
matter  of  courtesy  to  the  plaintiff  and  not  as  a  matter  of 
legal  obligation;  and  the  same  statement  affiant  made  to 
Mr.  Raymond. 

Affiant  further  states  that  never  at  any  time  did  he 
cause  the  said  Will  S.  Rising  to  make  any  representations  to 
the  plaintiff  or  anyone  else  that  the  "Buster  Brown" 
pictures  referred  to  1b rein  were  to  be  used  in  connection 
with  Mr.  Raymond  nor  did  he  ever  hear  anyone  say  that  the 
said  Raymond  had  made  such  statements  until  a  matter  of  abbut 
two  weeks  before  the  date  of  this  affidavit  when  the  said 


plaintiff  called  upon  affiant  and  stated  that  he  understood 
that  Rising  had  gotten  the  privilege  for  the  pictures  for 
Mr.  Raymond's  show  (Find  that  date). 

In  the  first  conversation  with  Outcault  m  commenting 
upon  the  value  of  the  "Buster  Brown"  pictures,  it  was  subject 
of  general  remark  by  Outcault,  Porter  and  affiant  that  the 
"Buster  Brown"  was  so  prominent  before  the  people  there 
would  be  very  general  sale  for  the  pictures  ,  and  the 
plaintiff  at  the  time  knew  it  was  contemplated  that  the 
films  would  be  used  for  sale.  Outcault  asked  affiant  when 
and  where  the  pictures  would  be  exhibited  and  he  was  told 
it  was  affiant's  intention  to  put  them  on  in  all  the 
theatres  possible  as  quickly  as  they  were  finiehed. 


I'W-V'W 


'?  ((  ?  )  l  &  ? 

1  ( 

v  . 

Memo,  for  Affidavit  of  Mr.  Porter. 


The  idea  first  originated  by  a  man  named  Anderson 
suggesting  a  scene  of  a  boy  stealing  jam  (Buster  Brown  then 
not  thought  of).  Then  Mosier  came  along  with  a  trains  d  dog; 
assembled  boy  and  dog  into  jam  scene.  This  led  up  to 
assembling  a  series  of  these  pictures  on  different  subjects. 
Dyer  was  consulted  to  see  if  there  was  any  infringement  in 
this.  Advised  later  by  Dyer  than  no  infringement  was  made 
and  they  could  even  use  the  title.  Porter  had  carefully 
abstained  from  copying  any  of  the  original  "Buster  Brown" 
cartoons  in  his  subjects.  About  five  subjects  in  the 
series  up  to  that  time.  Some  time  the  latter  part  of  Febru¬ 
ary  or  first  of  May,  Rising  said  to  Porter,  "Dick  Outcault 
is  a  nephew  of  mine,  and  I  think  I  could  get  his  permission  to 
use  the  name  "Buster  Brown"  (This  idea  had  re  ver  occurred 
to  Porter  before  this  time).  I  stated  to  Rising,  "All  right" 
and  that  if  he  could  secure  permission  from  Outcault  to  use 
the  title,  I  would  make  it  worth  his  while.  I  gave  him  money 
to  go  to  Flushing  to  pay  car  fare  and  expenses.  Rising,  I 
think  went  over  that  afternoon  or  the  following  day,  return 
ing  with  the  letter  of  March  2nd  from  Outcault,  and  sals 
everything  was  all  right.  This  is  the  only  letter  Porter  had 
ever  received  from  Outcault.  Porter  knows  writing  to  be 
Outcault's  because  he  has  compared  it  with  Outcault' a  signa¬ 
ture  on  his  cartoons. 

"I  told  Rising  I  was  very  anxious  to  wind  up  a 
series  of  pictures  and  that  awiting  until  the  following  Monda 
or  Tuesday  would  delay  getting  them  out  and  X  suggested  that 
I  go  to  Flushing,  take  my  camera  and  take  the  picture  of 
Outcault  making  a  sketch  of  "Buster  Brown',  Outcault  himself 
having  suggested  that  he  pose  for  that,  as  stated  by  Rising." 

Within  a  day  or  two  Rising  and  Porter  went  over  to 
Outcault's  house  and  found  he  waB  very  buBy.  "We  had  quite  a 
chat  with  him  in  general  ard  1b  spoke  of  the  "Buster  Brown" 


shio-w  and  Raymond,  and  that  was  my  first  knowledge  that  there 
was  a  "Buster  Brown  show  in  existence.  He  spoke  of  the 
business  they  were  doing,  and  during  our  conversation  he 
said  the  great  trouble  with  the  show  was  there  was  not  enough 
"Buster"  in  it  to  please  the  children  and  ladies;  that  the 
sucoessof  the  "Foxy  Grandpa"  show  was  that  it  was  confined  to 
the  hoys  and  grandpa.  He  mentioned  at  the  time  a  vaudeville 
turn  that  they  used  in  the  play,  the  six  Cuttys;  that  they 
were  paying  $600  a  week  for,  and  it  had  no  haring  on  the 
•Buster  Brown'  show.  I  suggested  why  wouldn't  it  te  a  good 
idea  if  the  pictures  were  a  success  to  have  Mr.  Raymond  put 
a  machine  on  showing  "Buster  Brown".  He  thought  it  was  a 
very  good  idea  dnd  said  he  would  suggest  it  to  Mr.  Raymond. 

He  then  said,  "I  am  very  busy,  there  is  a  gentlemen  Upstairs 
for  whom  I  am  making  a  sketch"  and  he  suggested  that  I  come 
up  with  him  and  wait  for  Rising  who  was  talking  to  some  member 
of  the  family;  Outcault  said  he  could  not  pose  for  us  that 
day,  but  when  Rising  returned  he  said,  "Now,  I  have  an 
engagement  with  Pach,  the  photographer  on  Broadway,  to  pose 
for  a  picture  on  Sunday  morning;  why  can't  I  kill  two  birds 
with  one  stone  and  stop  in  your  pice  Sunday.?"  The  following 
Sunday  he  came  there  and  posed  for  the  picture.  After 
securing  his  sanction  for  using  the  title,  we  thought  it  would 
be  a  good  idea  to  put  in  one  more  scene,  one  of  his  own,  the 
Bargain  Counter.  This  is  the  reason  the  "Bargain  Counter" 
scene  was  added.  At  this  time  and  at  other  times  there  were 
conversations  with  Outcault  in  which  it  was  thoroughly 
understood  that  defendants  were  going  to  market  these  goods 
as  they  saw  fit. 

In  talking  about  Rising  on  the  day  we  called  at 
Outcault' s  home,  he  said,  "Will  is  in  lard  luck"  and  that 
he  was  merely  doing  this  for  Will's  benefit;  that  anything 
Will  got  out  of  it  he  would  be  satisfied  with.  Outcault  made 
practically  the  same  statement  when  he  called  on  Mr.  Waters. 
After  the  receipt  of  the  first  Sanger  letter  by  the  Edison 
Company,  Outcault  called  at  Waters'  offioe  and  Porter  was 


present,  and  Outcault  made,  in  effect,  the  same 
that  he  did  this  solely  for  Rising’s  benefit  in 
he  might  get  some  benefit  out  of  it.  Only  the 
were  present  at  that  time. 


statement 
the  hope  that 
three  named 


Legal  Department  Records 
Motion  Pictures  -  Case  Files 

Triple  Damage  Suits 

This  folder  contains  material  pertaining  to  damage  suits  brought  against 
the  Motion  Picture  Patents  Co.,  Thomas  A.  Edison,  Inc.,  and  other  licensed 
manufacturers  by  the  Chicago  Film  Exchange,  the  Theatre  Film  Service  of 
San  Francisco,  and  other  licensed  and  unlicensed  exhibitors.  Most  of  the 
cases  were  initiated  in  April  and  May  1916,  after  the  federal  government's 
antitrust  case  against  the  Motion  Picture  Patents  Co.  was  settled  by  decree 
in  February.  The  plaintiffs  sought  triple  damages  from  the  defendants  under 
the  provisions  of  the  Clayton  Antitrust  Act  of  1914.  The  selected  items 
include  correspondence  by  Edison  and  by  Delos  Holden  and  Henry  Lanahan 
of  the  Legal  Department  concerning  the  defense  and  the  eventual  settlement 
of  the  suits.  Among  the  items  not  selected  are  bills  of  complaint  and 
correspondence  regarding  the  progress  of  litigation,  legal  fees,  and  legal 
representation. 


1 


DeiOB  Holden,  Esq., 

Legal  Dept.,  Thomas  A.  Edison,  Inc., 

Orange,  H.J. 

My  dear  Mr.  Holclen: — 

Confirming  my  telephone  message  to  Mr.  Unger,  you 
will  undoubtedly  be  pleased  to  learn  that  the  Chicago  Film 
Company  triple  damage  suit,  the  first  of  all  of  them  to  be 
reached  on  the  calendar,  was  put  over  by  Judge  Learned  Hand 
this  morning  to.  the  May,  1917  term.  He  did  this  because  yes¬ 
terday  the  Supreme  Court  set  April  9th  as  the  date  for  the  ar- 

with 

gument  of  the  appeal  in  the  Government  case.  Of  course,  this 
precedent  there  can  be  no  question  that  the  remaining  triple 
damage  suits  will  likewise  be  postponed, as  they  are  reached, 
to  the  same  term. 

Incidentally,  it  is  highly  improbable  that  the  Gover¬ 
nment  will  be  ready  to  argue  the  appeal  in  the  Government  case 
on  April  9th,  so  that  it  is  more  than  likely  that  there  will 


no  decision  by  the  Supreme  Court  until  next  Fall. 


Robert.  H.  McCarter,  Ksq.,  ,  V,  \  \ 

Prudential  31dg.,  A  \ 

Newark,  M.J.  \ 

My  dear  Mr.  McCarter: —  ^  ' 

Pursuant  to  your  suggeotion,  I-  oawNJurfcje  Learned  'j,;-.' ■ 
Hand  yesterday  afternoon  at/fheAvlooe  pf.hia  court  and  had  . 
quite  a  long  talk  -with  him;  /~\Hdv  remembered  that  he  had  , . ' 

put  over  the  cases  to  tl>e  Kny  term  ]andA, when  I  told  him  \  ; 

that  another  cane  whiohC  wa^not/onythe  calendar  at  that 
time  would  possibly  be  rSa.onqd/in/April,  ho  said  "Of  [t 

oourse  that  will  also  go  over  to7 the  May  term".  Later  on  y 
he  looked  up  the  Clgrk'e  calendar  and  .-found  that  in  no  \v 

event  would  the  Sdirptinor  oaeb.  b\reabhe.d  before  the  middle  f\\ 
of  the  month,  rtfdJrsssaid  thatin  aj>y  event,  he  would  not 
have  time  to  try/ut  t^sNirionth  even.  if  f  thp.  plalntiff 
attempted  to  jrto'  it.,;V:\  .  f 

TText\nonth  Judgi  Mhyor  will,  n.oid  the  oommori  law 
calendar  and  Judfes  Hqnd  Jeaidf  that  he  would  speak  to  \ 
JudgO/MSybr  about  thcSatudt ion  and  that  .1  .-should  see  ‘.Judge 
Mayer  sometime  nexKqsek,  whioh  of  course;  I  shall'  do,. 

|  (  The^e\is  a  possibility  apparently,  by  reason  ', of 
two  o'*  three  additional  judges  viho  will  be  here  in  June! 
that  one  of  the  ana  as  might  be  tried  then.  I  rather  H  • 
irathexedNthe  i-mp/ession  that  Judge  Hand  would  not  be  ino, lined 
himoel^vtoAh<ntl/up  the  trial  of  these  oaBee  if  plaintiffs 
'  urged  thbmjjfpr  he  remarked  that  he.. thought  the,  defendants 
had  already  reoelved  considerable  consideration.  |v 

It  was  quite  humorouB  to  see  the  quiok  way,::in\ 
whioh  he  assured  me  that  they  (the  judges)  would  not.  permit 
their  courts  to  be  tied  up  for  a  whole  year  in  the.' t.riql ;  . 

of  those  oanes,  this  remark  beingvma^e  when  I-  said'  there I 
were  twelve  of  them  and  that  probably  "  it'  would- take  ;,a  month 
to  try  each.  I  told  him  that  he  Bhould  not  blame,  "uis*:  that 
so  far  as  we  are  oonoexned,  we  did  not  oare  if  they' were  nev¬ 
er  tried,  and  that  we  oertainly  did  not  bring  thb  .sujite. 

As  I  have  said  above,  I  shall  see  Judg/S.;  Mayer  this 
coming  week  and  probably  shall  be  able  to  write  ,yi6u  d>ore.’: 


GENERAL  FILM  COMPANY 


4-40  FOURTH  AVENUE 


Thomas  A.  Edison,  Ino., 
Orange,  H.  J. 

Gentleman: - 


April  14,  191' 


(  nnom'vr  " ; 

APR  1Q1S1?  | 


^  C.  II.  V.'HSON  j 


At  a  hearing  before  Judge  Mayer  held  Thursday, 
April  12th,  oounsel  for  plaintiffs  and  defendants  in  the 
treble  damage  suits  being  present,  and  at  which  the  defendants 
requested  a  postponement  of  the  trials  of  these  oases  until 
after  October  1st,  when  the  hearing  on  the  appeal  in  the 
Government  Trust  suit  will  be  had  before  the  Supreme  Court; 
the  Court  ordered  the  trials  to  begin  on  the  second  Monday 
in  May,  the  Chicago  Film  Exchange  case  to  be  taken  up  first. 


It  Is  now  of  extreme  importance  that  our  oounsel 
concentrate  on  preparation  for  trial.  The  question  of  fees 
needs  immediate  attention. 


My  understanding  of  the  legal  representation  for 
the  various  defendants  is  as  follows* 

Thomas  A.  Edison,  Ino. 

By  MoCarter  &  English 

Motion  Picture  Patents  Co.) 
Blograih  Co.  } 

By  Mr.  Kingsley 

Essanay  Manufacturing  Co.  ) 
Selig  Polyscope  Co.  ) 
George  ELeine  j 

By  Mr.  Henry  Melville 

Vitagraph  Comiany 

By  Mr.  Edmonds 

Paths 

By  Coudert  Bros.  (Mr.  Samuels) 

General  Film  Co. 

By  Mr.  R.  0.  Moon 

Various  defendants 

By  Hr.  H.  0.  Moon,  Mr.  Allen  % 
and  Mr.  Geo.  F.  Soull. 

Various  parties  in  Interest  have  decided'  it  to  be 
imperative  that  a  material  sum  of  money  to  cover  the  expenses  of 
oounsel  aoting  in  the  interest  of  all  defendants  be  subscribed. 


I 


General  Film  Co. 


I  New  York. 


-2- 

thb  soun  Frnro 


11  subscribers  at  $250.00  each  $2,750.00 

Paid  to  April  lBt  $1,565,60 

Bill  rsndersd  April  1st  570.75 

1,936.35  1.956.35 

Available  balance  -  813.65 


GEHEBAL  FOIIP  FOR  ATTORNEYS'  FEES  AMD  OTHER  PURPOSES 

Fuad  to  pay  for  counsel,  6  subscriptions  at  $500  each  -  $3,000 

Subscribers  are  the  following:  General  Film  Company, 

Kaletn  Company,  Vitagraph  Company,  Sellg  Polyscope 

Company,  Essanay  Manufacturing  Company  and  George  Kleins. 

Mr.  Samuels  has  recommended  to  Pathe  that  they  subsorlbe 

an  equal  amount*  • 

While  individual  and  general  oounsel  having  these  treble 
damage  suits  in  hand,  have  labored  industriously  on  these  oases,  it 
seems  necessary  that  there  be  Intensified  co-operation  among  the 
defendants.  The  decision  in  the  first  case  will  establish  a  precedent 
of  the  utmost  importance.  While  the  plaintiffs  may  have  selected  it 
because  of  its  assumed  strength,  there  are  several  points  involved 
which  may,  in  fact,  turn  the  selection  of  this  plaintiff  for  the 
opening  trial  to  the  advantage  of  the  defendants. 

Several  subscribers  who  have  been  interviewed  in  the 
matter  have  suggested  an  additional  appropriation  of  $2,500  from  eaoh- 
defendant,  that  there  be  a  working  fund  whioh  will  adequately  take 
care  of  legal  fees. 

Ur.  Allen  has  submitted  bills  for  his  services  amounting 
to  about  $3,000,  viilch  have  not  yet  been  passed  upon. 

Judge  Moon  asks  as  general  counsel  a  fee  of  $5,000,  whioh 
la  not  in  full  for  services  in  this  cause. 

One  subscriber  suggests  the  engaging  of  oounsel  of  national 
reputation  with  speolal  knowledge  of  the  Sherman  law,  and  has  submitted 
four  names  known  to  all  of  the  defendants.  It  may  be  too  late  to  engage 
suoh  oounsel,  but  inquiries  will  be  made  immediately  and  the  results 
submitted. 

The  writer  has  been  asked  to  take  up  this  matter  of  eub- 
Boriptions.  Will  you  kindly  address  him  at  #63  East  Adams  Street, 
Ohioago,  from  Monday,  April  16th,  to  Tuesday,  April  24th.  letters 
mailed  on  the  Twentieth  Century  at  2:45  on  any  day.  will  be  delivered 
in  Chicago  the  next  morning  at  about  11  o’olook.  1 


t 


General  Film  Co. 


I 


New  York. 


It  la  necessary  that  all  defendants  he  warned 
that  lethargy  at  this  stage  may  lead  to  disastrous  consequences. 

Manufacturers  who  have  correspondence  or  other 
matter  in  the  files  covering  transactions  with  the  Chicago 
Film  Exchange,  and  if  such  matter  has  not  yet  been  tshen  up 
with  Ur.  Soull,  are  ashad  to  communicate  with  him  immediately. 


gk/pg. 


Very  truly  yours. 


Mr.  Wilson:— 

At  your  request  and  for  the  information  of  Mr .Edison 
and  yourself,  I  summarize  below  a  number  of  matters  concerning; 
which  I  have  advised  you  from  time  to  time  recently. 


Damage  Suite 

The  appeal  in  the  Government  Anti-Trust  suit  against  the 
Patents  Company  and  the  Edison  Company  was  originally  set  for  hear¬ 
ing  by  the  Supreme  Court  on  April  9th,  and  on  the  strength  of  this 
the  Courts  here  had  postponed  the  trial  of  the  triple  damage  suits 
until  May.  The  Department  of  Justice  was  not  ready  to  argue  the 
oase  on  April  9th,  however,  and  the  appeal  was  set  over  to  October 
2nd.  The  Courts  here  have  refused  to  hold  up  the  trial  of  the 
damage  suits  until  after  the  Supreme  Court  can  pass  on  the 
Government  oase  and  has  set  the  first  of  these  suits  for  trial  on 
May  14th,  1917.  That  suit  is  one  brought  by  the  Chicago  Film 
Exchange,  a  concern  not  licensed  by  the  Patents  Company,  but  one 
with  whioh  the  Edison  Company  and  a  number  of  the  other  lioensees 
were  dealing  up  to  the  time  the  Patents  Company  was*  formed.  At 
that  time  all  of  these  companies,  including  the  Edison  Company, 
stopped  dealing  with  that  exchange,  and  it  now  olalms  that  it 
was  damaged  by  being  deprived  of  its  source  of  Bupply.  Its 
claim,  whioh  of  course  is  highly  padded,  is  for  $1,400,000.  whioh 
it  asks  to  have  tripled. 

In  these  suits  the  Edison  Company  is  represented  by 
Mr.  McCarter  and  I  have  been  spending  considerable  time  with  him 
personally,  and  in  faot,  all  of  my  time  on  this  oase,  because 


C.H.V7, 


1 


C--  /LMB  -  V  24/17 


all  of  the  defendants  are  looking  to  me  to  prepare  the  faots 
for  presentation.  At  the  end  of  an  interview  yesterday  with 
Mr.  McCarter,  he  agreed  that  he  and  I  would,  on  May  let,  1917, 
bury  ourselves  here  in  New  York  at  some  place  where  we  oould 
have  the  necessary  papers  to  work  with,  but  where  no  one  would 
know  where  we  were  bo  that  we  oould  devote  the  two  weeks,  before 
the  trial  to  concentrated  preparation.  You  will,  of  course, 
appreciate  that  this  first  case  ia  the  test  case,  and  in  fact, 
because  we  have  no  Supreme  Court  decision,  we  are  in  the  position 
to  raise  the  same  defenseB  in  this  suit  as  we  did  in  the  Govern¬ 
ment  case  and  have  them  tried  out  precisely  as  if  there  never 
had  been  a  Government  case.  While  the  judges  here  in  New  York 
will  be  respectful  toward  the  decision  of  Judge  Dickinson  in 
Philadelphia,  we  are  confident  that  they  will  not  be  Influenced 
by  it . 

Last  Tuesday  there  was  a  conference  of  all  the  oounsel 
representing  the  different  defendants  in  the  triple  damage  suits, 
and  it  was  expressly  agreed  that  Mr.  McCarter  should  croes- 
examine  the  witnesses  and  make  the  opening  address  to  the  jury 
and  it  was  evidsnt  that  it  was  also  desired  that  he  should  at 
least  assist  in  tha  summing  up.  There  will  be  no  difficulty, 
therefore,  in  my  opinion,  in  having  our  plan  of  Mr.MoCarter 
virtually  being  the  counsel  in  charge  of  the  case,  aooepted  by 
the  other  counsel,  suoh  other  oounsel,  however,  aiding  in  the 
work. 

I  have  repeatedly  told  Mr.  McCarter  that  the  Edison 
Company  wlehes  him  to  defend  these  suits  precisely  as  if  it  were 
the  only  defendant,  and  that  he  were  the  only  oounsel  in  the  oase 


•C.H.W. 


GFS/LMB  -  4/24/17 


so  that  there  oould  be  no  question  of  dividing  his  responsibility  . 

Poraonally  I  have  laid  aside  all  of  my  other  nork  and 
am  concentrating  also  on  this  damage  suit,  for  I  do  not  know  of 
anything  of  sufficient  importance  which  cannot  be  deferred  until 
after  the  trial  of  this  first  case. 

— -00O00— 

Latham  Patent 

The  recant  deoislon  of  the  Supreme  Court  on  the  suit 
by  the  Patents  Company  against  the  Universal  Company  on  the 
Latham  patent  has  the  effect  of  determining  finally  that  we 
cannot  enforce  the  restrictions  on  the  patent  plates  on  the  pro¬ 
jecting  machines  sold  under  the  Patents  Company's  license. 

In  order  to  arrive  at  this  conclusion,  the  Supreme  Court  flatly 
overruled  its  own  decision  in  the  Diok  case  whloh  te  had  been 
following  in  our  contracts. 

The  validity  of  the  Latham  patent  has  not  been  disturbed 
in  any  v/ay  nor  passed  on  by  the  Court,  and  the  patent  is  therefore 
ao  good  today  as  ever.  It  expires  in  August,  1519. 

Some  time  since  we  started  a  suit  against  a  dealer 
in  Philadelphia  based  on  the  sale  of  a  Power  machine,  this  suit 
being  to  test  the  validity  of  the  patent. 

In  view  of  the  decision  of  the  Supreme  Court  and  the 
short  term  of  the  patent,  it  is  my  belief  that  the  Patents 
Company  should  now  reach  some  definite  understanding  with  the 
machine  manufacturers  by  which  they  would  all  pay  a  royalty.  It 
seems  to  me  that  almost  anything  we  oan  get  out  of  the  patent 
should  be  aooepted.  The  Nicholas  Power  Company  at  the  time  it 


C.H.V7. 


U.-s/LMB  -  4/24/17 

stopped  paying  its  royalties,  asserted  that  it  would  continue 
to  pay,  if  we'  would  reviee  the  lioenoa  agreement  so  sb  not  to 
compel  it  to  do  the  thing  whioh  the  Supreme  Court  now  eaye  we 
cannot  enforce.  But  in  the  meantime  hack  royalties  amounting 
possibly  to  §15,000.  or  §20,000.  have  accrued,  and  it  is 
doubtful  whether  they  would  now  come  in  and  pay  the  back  royalties 
rather  than  take  a  chance  and  fight. 

The  Patents  Company  is  getting  a  small  revenue  from  one 
machine 

of  the/ manufacturers  which  is  just  about  sufficient  to  pay  the 
operating  expenses,  hut  not  enough  to  pay  the  lawyers’  fees  whioh 
have  accumulated  in  connection  with  this  litigation  over  the 
Lathera  patent,  and  its  chare  of  the  defense  of  the  damage  suits. 

It  is  desirable  for  the  present,  however,  to  keep  the 
Patents  Company  in  some  sort  of  position  where  its  papers  can  he 
readily  accessible  because  its  records  are  and  will  he  in  con¬ 
stant  use  in  tho  preparation  and  defense  of  the  damage  suits. 

I  am  of  the  opinion _that  it  will  be  beot  to  leave  the 
Patents  Company  situation  as  it  is  until  after  the  outoome  of 
the  damage  suit  is  determined,  and  then  if  there  is  a  pause  be¬ 
tween  the  trial  of  the  first  and  seoond’  of  euoh  suits,  take  up 
seriously  the  matter  of  the  future  polioy  as  to  the  Patents 
Company, 


Delos  Holden,  Esq., 
Thomas  A.  Edison,  Inc., 
Orange,  N.J, 

My  dear  Holden:-- 


You  will  reoall  that  some  time  back  you  suggested 
a  scheme  by  which  the  Edison  Company  could  be  protected  in 
the  event  of  an  adverse  judgment  in  the  ooming  damage  suit. 

I  think  it  is  highly  desirable  for  you  to  oommenoe  to  lay 
plans  and  have  the  neoessary  arrangements  made  to  oarry  out 
suoh  a  scheme  beoause,  while  we  are  hopeful  of  the  suit, 
it  is  not  by  any  means  a  certainty  that  we  will  not  have  a 
heavy  judgment  against  us. 

The  situation  of  the  case  is  about  like  this: 

Judge  Mayer  has  said  that  if  the  plaintiffs  use  the  Government 
decree  and  obtain  a  judgment,  then  he  will  stay  the  collection 
of  the  judgment  under  some  sort  of  conditions  at  present 
undetermined  so  that,  in  the  event  Dickinson's  decree  is  re¬ 
versed  in  the.  Supreme  Court,  we  will  get  a  new  trial  as  a 
matter  of  right.  Then  too,  because  of  the  number  of  in¬ 
volved  questions, '  which"1  will  oome  up,  it  is  highly  probable 
that  we  could,  by  giving  a  supersedeas  bond,  Btay  the  oolleo- 
tion  of  the  judgment. 

But  you  will  note  that  either  of  these  would  probably 
involve  the  giving  of  a  bond  beoause  while  a  levy  might  be 
made  on  real  estate  and  beoome  a  lien  on  the  property  pending 
the  appeal,  most  of  the  assets  of  the  various  defendants  is 
in  personal  property,  and  of  course,  no  such  lien  is  possible. 

I  think,  therefore,  that  you  should  also  be  prepared 
to  arrange  for  the  giving  of  a  bond.  Under  the  oireumstanoes 
of  the  case,  this  will  probably  have  to  be  a  joint  bond  for 
the  entire  judgment  beoause  obviously  the  plaintiffs  would  not 
accept  a  separate  bond  for  any  portion  from  any  one  of  the 
defendants.  Inasmuch  as  the  Edison  Company  is  probably  the 
most  obviously  solvent  one  of  all  of  the  defendants,  the 
largest  portion  of  the  burden  of  showing  assets  to  support  such 
a  bond  will  probably- fall  on  the  Edison  Company. 

I  am  writing  this,  not  by  way  of  making  any  suggestions, 


% 


Delos  Holden,  Esq. 


5/VH 


but  merely  to  advise  you  of  the  situation  so  that  you  can  act 
in  the  interests  of  the  Edison  Company  as  you  think  best. 


Yours  very  truly. 


GFS/LMB 


Robert  H.  McCarter,  Es<j.,  3 

Prudential  Building, 

Hewark,  R.  J. 

Dear  Hr.  McCarter: 

I  understand  that  an  agreement  has  been  reached  for  tho 
settlement  of  the  suit  of  Chicago  Film  Exchange  vs.  Motion  Picture 
Patents  Co.  ot  al  and  tho  companion  suits  in  which  the  plaintiffs 
are  represented  by  tho  same  attorney  as  in  tho  suit  mentioned,  as 
discussed  at  our  recent  conference,  and  that  the  amount  to  be  paid 
by  Thomas  A.  Edison,  Inc.  iB <3100,000.  I  hand  you  herewith 
checks  drawn  to  your  order  for  this  amount  to  be  used  for  this 
purpose. 

Mr .  Edison  relies  entirely  upon  you  to  protect  the  inter¬ 
ests  of  Thomas  A*  Edison,  Inc.,  Motion  Picture  Patents  Co.  and 
Edison  Manufacturing  Co.  in  this  Battlement  and  to  secure  from  the 
plaintiffs  such  instruments  of  release  or  otherwise  aB  may  be 
necessary  for  such  protection. 

Kindly  acknowledge  receipt  and  oblige, 

Yours  very  truly, 

General  Counsel. 

EUCLS. 

DH/JU 


4 


i2 


Juno  11,  1917 

George  P.  Scull,  Esq., 

149  Broadway, 

Hew  York,  U.  Y. 

Bear  Hr,  Scull:- 

Hr.  Wilson  would  like  to  havo  you  write  up  a  sort  of 
resume ,  telling  what  was  done  in  the  recent  settlement  of  cer¬ 
tain  treble  damage  suits,  including  a  list  of  the  suits  settled 
and  the  amount  paid  by  us  and  each  of  the  other  defendants  in 
each  of  the  suits.  Also,  please  tell  what  happened  in  the 
Sampliner  suit, 

Kr.  Wilson  wo^ld  also  like  to  have  a  list  of  any  other 
such  suits  that  are  pending  and  a  statement  of  your  views  as 
to  the  likelihood  of  there  being  other  suits. 

Will  you  kindly  send  a  couple  of  extra  copies  so  that 
we  may  have  one  for  this  department  and  one  to  turn  over  to  Hr. 
Edison, 

Yours  very  truly. 


Hi-JS. 


(Personal) 


Henry  Lanahan,  Esq., 

Legal  Dept., 

Thomas  A.  Edison,  Ino., 

Orangey  N.  J. 

My  dear  Mr.  Lanahan: 

I  have  yours  of  the  11th  inst.,  and  enolose 


three  oopies  of  memorandum  whioh  I  think  .covers  what  Mr. 
Wilson  has  in  mind. 


[ENCLOSURE] 


1  I 


!  Ra :  Settlements  of  Damage  Suita 

Kie  following  damage  suits  have  been  settled  and 
releases  (exoept  Miles  Bros.)  obtained  from  the  plaintiff 
oo ipo rations ,  and  from  the  individuals  connected  with  them: 
Chioago  Film  Exchange 
George  Melies 
Eugene  Cline 
Samuel  Sohiller 
U.  3.  Film  Exchange 
Standard  Film  Exchange 
Colorado  Film  Exchange 
Theatre  Film  Service  of  San  Francisco 
Imperial  Film  Exchange  (fruesdale,  Receiver* 
Miles  Bros. 

Globe  Film  Service 
Royal  Film  Service 

In  the  case  of  Milos  Bros.,  the  settlement  has  been 
effeoted,  but  because  Miles  Bros,  wont  into  bankruptcy  some 
years  ago,  it  was  deemed  unsafe  to  deal  directly  with  them. 
Consequently,  both  sides  have  agroed  to  the  settlement  and 
the  releases  and  money  will  be  exchanged  when  it  is  determin¬ 
ed  to  whom  the  money  shall  be  paid,  the  money  in  the  meantim|| 
being  placed  in  the  hands  of  ex-Juage  McCall,  as  trustee.  '' 
By  separate  agreement,  about  1/6  of  the  settlement  ii 
each  case  was  also  placed  in  the  [hands  of  ox- Judge  McCall 
to  be  paid  to  the  plaintiffs  at  the  end  of  Hovember  1917, 
provided  they  have  in  the  meantime  stirred  up  no  more  litiga¬ 
tion,  or  become  interested  in  no  similar  litigation. 


[ENCLOSURE] 


I 


1 


|  In  the  oa8e  of  Globe  Film  Service  ana  the  Royal  Film 

Service, settlement  was  made  directly  with  the  plaintiff  for 
the  lump  sum  of  §2500,  for  both  oases.  The  attorney  has 
a  lien  of  60#  of  the  recovery,  and  we  reserved  enough  from 
the  total  settlement  to  pay  this  lien. 

The  total  settlement  amounted  to  $326,000.  Of 
this  Edison  contributed  §100,000.,  Biograph  §50,000.,  and 
Vitagraph,  Pathe,  Kleine,  Selig,  Essanay,  Kalem  and  General 
Film  §25,000.  eaoh. 

The  above  is  the  list  as  given  out,  but  I  have 
reason  to  believe  that  the  General  Film  share  was  made  up  by 
possibly  three  or  more  of  the  others,  and  I  have  also  reason 
to  believe  that  Selig' s  share  wbb  advanoed  by  Kleine  and 
Spoor. 

In  the  only  other  remaining  suit,  that  of  Samplinei , 
after  negotiations  to  settle  on  any  reasonable  basis  had 
fallen  through,  we  went  to  trial  last  week  on  the  single  issue 
as  to  whether  or  not  Sampliner,  who  is  a  lawyer,  in  buying 
the  claim  had  been  guilty  of  champerty,  so  that  he  could  not 
maintain  a  suit.  After  trial,  lasting  one  day,  the  Judge 
directed  a  verdict  for  the  defendants  and  dismissed  the  oom- 
plaint.  There  may  be  an  appeal  from  this ,  but  it  cannot  be 
heard  until  next  fall  in  any  event. 

The  foregoing  acoounts  for  all  of  the  suits  brought 
and  settled.  There  is  a  possibility,  but  hardly  a  probabil¬ 
ity  of  two  or  three  more  suits  being  brought,  as  there  are 
some  people  who  have  as  good  a  oauso  of  action  as  those  with 
whom  we  have  settled,  but  there  are  various  reasons  which  lecd  '^ 
me  to  believe  that  such  suits  are  hardly  likely.  One  ohief 
reason  is  that  I  believe  that  Cookran  &  Wanton  combed  the 


[ENCLOSURE] 


I 


I 


country  pretty  well  for  possible  oases,  and  if  their  canvass 
did  not  suooeed  in  stirring  up  litigation,  it  is  hardly 
likely  that  anything  else  will.  In  any  event,  any  suits 
brought  from  this  time  on  will  have  the  greater  part  of  the 
alleged  damage  barred  by  the  Statute  of  limitations . 


June  13,  1917 


George  S’.  Soull 


2ha  above  case,  as  you  know,  was  filed  many  months  ago, 
the  defendants  being  the  same  as  in  all  of  the  other  previous 
triple  damage  suits.  Service  was  had  on  a  number  of  the  defen¬ 
dants  long  ago,  but,  for  some  reason,  the  plaintiff  did  not  at¬ 
tempt  to  serve  any  of  the  3dison  defendants. 

Mr.  Dyer  has  sent  me  a  copy  of  the  complaint  which  has 
just  been  served  on  him  and  I  presume  that  you  will  wish  me  to 
look  after  this  case  the  same  as  I  did  the  others. 

Plaintiff 4s  attorney  hasv  as  you  will  also  recall, 
been  attempting  to  settle  this  case  and  I  talked  to  Kingsley  . 
again  this  morning  about  it,  It  seems  that  plaintiff's  attor¬ 
ney  is  willing  to  settle  for  $5000.00  which  is  really  more  than 
the  case  is  worth  so  far  as  its  merits  are  concerned , but  probably 
■less  than  it  would  cost  us.  to  prepare  for  trial,  let  alone  ac¬ 
tually  try  the  case.  I  think  it  i3  likely  that  he  will  be  will¬ 
ing  to  allow  each  of  the  corporations,  together  with  the  individ¬ 
uals,  in  whom  such  cbrporation  is  interested,,  to  buy  peace  at 
$500,00  each,  and  personally  I  think  that  if  will  be  advisable 


V 


'(» 


Delos  Holden,  3s4.«...8*...^'Jan.  21,  1919. 


lor  the  Sd^Ron  Company  to  do  this.  'Dhere  are  further  con¬ 
versations  to  be  had  and  possibly  t^iis  price  oan  be  cut 
some . 

Will  you  please  advise  me  what  you  wish  me  to  do 
and  also  whether  or  not  you  agree  with  me  as  to  the  foregoing 
proposed  terms  of  settlement. 


January  22,  1919 


Goorga  ]?,  Scull,  Ksq., 

141  Broadway, 

Mow  York,  M.  Y. 

20th  CEMTURY  OPTISCOFK  COMPAHY 

Doar  Soull: 

Replying  to  your  favor  of  tho  21st  Instant,  wo 
should  be  pleased  to  have  you  look  after  this  case  on  our 
behalf. 


If  you  arc  ublo  to  sottle  the  case  as  regards  \ 
the  Edison  Interests,  and  suoh  Individual  defendants  as  were 
oonneoted  with  tho  Edison  interests,  at  a  total  oost  of  $500 
you  are  hereby  authorized  to  do  so. 

Very  truly  yours. 


General  Counsel, 


^n^fo^y, 

0. 


Mar oh  18,  1919. 


Henry  lanahan,  Esq.., 
legal  Department, 

Orange,  M.  J. 

He  -  Samollner  vs.  Patents  Company  et  al. 

My  dear  to.  lanahan:  - 

1  have  yours  of  the  17th  instant,  and  am  enclosing 
two  copies  of  a  memorandum  prepared  in  accordance  with  your 
request. 


GPS /A 


Yours  truly. 


neoEivKe  e>'^ 

a*. 


Enclosure. 


[ENCLOSURE] 


Ur.  Charles  Edison : 

i’hlB  memorandum  io  being  written  you  at  tho  roouont  of  Hr. 
Lanahnn.  Somotimo  Einoo  I  told  Ur.  Lunahnn  that  all  of  tfco  triple  dam¬ 
age  suits,  except  tho  Twentieth  Contury  Optiacopo,  had  boon  disposed  of. 
At  that  timo  tho  ouit  of  Snmplinor  for  triple  damages  had  boon  tried 
in  tho  District  Court  horO  in  How  Yorb,  and  had  rooultod  in  a  verdict 
for  dofondanto  on  a  opcoial  defense  which  thoy  had  sot  up,  to  tho  of  foot 
that  Samplinor,  an  attornoy-at-law,  could  not  buy  up  and  prosocato  a 
npooulativo  cult  of  this  character. 

This  vordict  had  boon  appoalod  to  tho  Court  of  Appeals  horo, 
and  tho  dociolon  of  t ho  lower  court  affirmed. 

At  tho  timo  that  I  t  a  Deed  to  Ur.  Lanahnn  it  had  boon  as aimed, 
apparently  without  justified  on,  that  tho  case  would  go  no  further. 

Loot  wool;  papors  in  an  appeal  to  tho  Supremo  Court  of  tho  United  Staton 
wore  served  by  the  plaintiff,  so  that  that  appeal  will  have  to  bo  mot 
whoa  it  arises.  Thoro  is  no  reanon  to  believe  that  tho  Sur.romo  Court 
will  advanoo  tho  hearing  so  that  it  probably  will  not  be  roaohod  for 
more  than  a  yoar. 

Personally,  I  have  great  confidenao  in  our  dofenno,  which 
has  already  boon  approved  by  two  courts.  Tho  situation  is  so  out¬ 
rageous,  that  a  court  iB  inclined  to  find  in  dofondsnts  favor  if  it 
possibly  can.  Tho  ovidonoo  shows  that  Samplinor,  an  attorney  at  Cleve¬ 
land  who  had  done  come  worh  for  tho  liahe  Shore  Film  Exchange,  to  oh  tho 
olalm  of  tint  Exchange  against  tho  licensed  manufacturers  under  tho 
Sherman  Act,  in  paymont  for  servicoo  valued  at  not  more  than  $6,000. 


[ENCLOSURE] 


4 

Mr.  Chatties  Edison 

Ho  then  brought  suit  in  Ohio  against  the  Genoral  Film  Company  only 
for  §101,000,  and  subsequently  brought  suit  in  the  Southern  District 
of  Hew  York  for  §250,000.  The  defense  also  showed  that  at  the  time 
ho  took  tho  olaim  there  had  been  no  attempt  to  ascertain  the  amount  of 
alleged  damage  which  had  been  done  to  (the  Bxohange. 

Both  courts  found  that  this  was  a  highly  speculative  iiti-~ 
gation,  and  one  which  the  law  does  not  permit  an  attorney  to  engage 
in* 

It  is  my  personal  opinion,  that  this  appeal  has  been  filed 
in  the  desperate  attempt  to  get  the  defendants  to  pay  something  so  as 
to  avoid  further  exponso  in  connection  with  the  appeal.  The  decisions 
,of  both  the  lower  courts  have  been  so  strongly  in  favor  of  the  de¬ 
fendants,  that  it  appears  that  Sampling, or  rather  his  attorneys,  are 
making  a  desperate  attompt  in  this  appeal. 


liar.  18,  1919. 


y  -  "Sip-, 

'^T4  £3 


March  19,  1919 


Mr.  Charles  Edison:- 

In  my  memorandum  of  Maroh  4th  to  Mr.  Thomas  A.  Edison, 
prepared  at  your  request,  I  stated  that  all  of  the  triple  damage 
suits  had  been  settled  up  except  the  Twentieth  Century  Optisoope 
Company  case,  this  being  based  on  information  received  from  Mr. 
Scull. 

Last  week  we  were  advised  by  Mr.  Scull  that  he  had  been 
served  with  a  notice  of  appeal  to  the  United  States  Supreme  Court 
in  the  case  of  Sampliner  vs.  Motion  Picture  Patents  Company,  Thomas 
A.  Edison,  Ino.,  Prank  L.  Dyer,  et  al.  I  have  asked  Mr.  Scull  to 
write  a  brief  statement  concerning  this  case,  and  I  am  forwarding 
the  same  to  you  herewith  and  presume  that  you  will  hand  it  to  your 
fathe  r. 


Henry  Lanahan 


I 


f?«fk3 


December  21,  1920 


Ur,  Thomas  A,  sai.son. 

You  will  porhapg  remember  that  there  Is  still  pending 
one  of  the  Trlplo  Damage  Suits  brought  against  various  defendants 
Including  Hot  Ion  Picture  Patents  Company,  Thomas  A.  Edison,  In¬ 
corporated,  and  other  motion  picture  manufacturers,  for  an  alleg¬ 
ed  violation  of  tho  Sherman  Anti-Trust  Aot,  ThLs  Is  the  suit 
brought  by  Joseph  H.  Sompllner,  In  this  oase  one  of  the  defenses 
was  that  the  acts  by  whloh  Sampllnor  obtained  his  rights  as  plain¬ 
tiff  constituted  champerty,  and  that  the  suit  could  not,  therefore, 
bo  maintained.  Tho  case  was  tried  upon  this  single  Ibbuo,  end 
after  tho  plaintiff  had  put  In  his  case,  the  defendants  moved  for 
a  dlreoted  verdict  and  the  attorney  for  tho  plaintiff  also  moved 
for  the  dlreotlon  of  a  verdict  In  his  favor,  Tho  Court  thereupon 
seems  to  have-  made  a  finding  of  fact  and  dlreoted  a  verdict  for 
tho  defendants.  The  case  woo  appealed  to  tho  Circuit  Court  of 
Appeals  who  sustained  the  deolslon  of  the  lower  Court  and  an 
appeal  was  thereupon  taken  to  tho  U.S.  Supremo  Court,  A  doolslon 
has  just  boon  rendered  reversing  these  doolslons,  and  I  hand  you 
herewith  a  copy  of  the  oplnLon  of  the  supreme  Court,  Ab  I  under¬ 
stand  the. opinion,  tho  quostlon  relates  to  a  teohnloal  point  of 
procedure,  and  apparently  moans  that  the  trial  Judge  Bhould  not 
have  passed  upon  a  question  of  faot,  but  s ho.uld -  have :.-p era 1 1 1 e d 
it  to  go  to  tho  jury.  The  oase  has  been  remanded  for  farther 
proceedings.  This  means  that  a  new  trial  Is  ordered,  and  the 


part  Lea  are  in  preoisely  the  same  poaLtLon  aa  when  they  started, 
that  La,  the  Dome  defenses  are  open  to  us  as  boforo  aiid;*th6.:i’te 
question  of  ohamperty  oan  ho  trLed  out  before  a  jury. 

Your  interests  Ln  this  litigation  are  Ln  the  hands 
of  Ur.  Robert  McCarter,  Mr.  Scull  informs  mo  that  he  ana  Mr. 
McCarter  ana  Mr.  Seabury,  who  represents  other  defendants,  are 
to  have  a  oonferonoo  this  wook  to  doolde  upon  further  prooeduro. 


Delos  Holden 


February  15,  1921 


Mr.  Charles  Batson: 


iferrLng  to  the  annexed  letW/frora  Mr.  Soull.  You 


will  note  that  the  defendants  In  the  Sampllner  suit,  which 
Include  Motion  PLoture  Patents  Company  and  Thomas  A.  Edison, Inc. , 
are  liable  for  costs  on  the  appeal  to  the  Supreme  Court  amounting 
to  approximately  .$775.00.  Fortunately,  Mr.  Soull  has  already 
collected  §250.00  each  out  of  some  of  the  other  defendants 
and  nowasts  authority Vo  contribute  one-fifth  of  the  costs  on 
behalf  of  the  Edison  Company  up  to  -§250.00. 

This  arrangement^  seems  to  me  is  fair,  and  If  you  will 
approve  I  will  give  Mr.  Sc^ill  this  authority. 

As  a  matter  of  fast,  the  entire  amount  could  be 
collected  by  the  plaintiff  from  any  one  of  the  defendants , so 
that  it  is  to  our  advantage  ^o  have  the  amount  divided  up. 


oLj~- 


Id  52? 


Delos,  Holden,  Esq. , 

Thomas  A.  Edison,  Ino., 

Orange,  N.  3. 

My  dear  Holden: 

Ee  -  Sampliner  v.  Edison  at  al. 

I  enoloBe  copy  of  a  letter,  received  this  morning  from 
William  Seat-nry.  I  -know  nothing  more  than  v/hat  is  stated  in  the 
letter.  I  have  been  trying  to  reach  Mr.  McCarter  today,  brt  find 
that  he  is  in  Trenton  where  he  will  be  tomorrow  also,  and  that  he  has 
a  case  on  in  Newark  on  Satvrday.  It  is  possible  that  he  will  be  in 
his  office  tonight  abort  five  o’clock  and  I  have  left  word  to  have 
him  call  me  up  then.  I  should  have  liked  to  have  arranged  a  con¬ 
ference  with  Mr.  McCarter  and  yourself.  Unfortunately  all  of  my 
evenings  of  this  week  are  taken  up  and  Monday  and  Tuesday  of  next 
week  I  shall  probably  be  in  Philadelphia.  I  really  do  not  believe, 
however,  that  the  offer  made  by  the  plaintiff  is  likely  to  be  with¬ 
drawn. 

•  I  am  dropping  a  letter  .to  William  Seabury  stating  that- 
both  Mr.  McCarter  and  myself  are  tied  up  and  possibly  will  not  be 
able  to  give  him  an  answer  until  some  time  next  week. 

In  the  meantime,  will  you  think  the  matter  over  and 
•possibly  discuss  it  with  the  Edison  people  to  ascertain  their  attitude. 


Delo3  Holden,  Esq, 


Mar  oh.  3,  1921. 


Id  6P? 

I  p»e@rr; 


I  am  sending  a  oopy  of  Seabury's  letter  to  Mr. 


Yours  very  truly. 


G2S*C 


[ENCLOSURE] 


Id  62? 


WILLIAM  MAR3T0H  SEABURY 
120  Broadway, 

Hew  York 


March  2 , 


1921. 


Dear  Mr.  Soull:- 

Judge  Seahury  had  a  long  conference 
today  with  Mr.  Cannon  of  Cleveland,  one  of  Sampliner’s 
counsel ,  and  Hr.  GustavuB  A.  Rogers,  at  which  a  possible 
settlement  of  the  Sampllner  oase  was  discussed. 

As  a  final  offer  of  settlement  Mr. 

Cannon  and  Mr.  Rogers  offered,  subject  to  withdrawal 
without  notice,,  to  accept  $30,000  and  costs  which  we 
understand  not-  to  exceed  $1,000. 

I  have  telegraphed  Mr.  A.  B.  Smith, 
President  of  Vitagraph,  who  is  at.  present  in  Los  Angeles, 
and  have  told,  him  that  if  five  defendants  are  prepared  to 
•  contribute  equally  to  this  settlement ,  I  am  prepared  to 
recommend  its  acceptance.  ‘ 

Will  you  please  advise  me  immediately 
how  you  feel  about  it  and  whether  your  client  wm  be 
one  of  five -tV contribute  equally  to  this  settlement. 

Mr.  Cannon  is  returning  to  Cleveland 
on  Friday  of  this  week  and  Bays  he  would  like  an  answer 
before  he  goes. 

Sincerely  yours. 


Id  62? 


ci 


Mr.  Thomas  A.  Edison: 


l^Lj 


March  9,  1921 


I  annex  hereto  a  letter  aatea  March  2,  1921  £rom  William 
Seabury  to  Mr.  Scull.  Mr.  Seabury  is  attorney  for  the  Vitagraph 
Company. 


I  haa  a  conference  this  morning  with  Mr.  Robert  McCarter 
ana  Mr.  Scull,  in  order  to  obtain  their  .views  ana  recommendatlop  as 
to  whether  or  not  we  shouia  agree  to  the  proposea  settlement. 

The  aeoision  of  the  Supreme  Court  in  this  suit  means  that 
the  aefense  of  ohamperty,  which  by  stipulation  between  counsel  can 
be  trie!  separately  from  the  main  Issues  of  the  suit,  is  a  question 
which  shouia  go  to  the  jury,  that  is,  it  shouia  be  left  to  the  jury 
to  aecide  whether  or  not  Sampllner  aoqulrea  the  claim  upon  which  he 
has  brought  suit  with  the  intention  or  for  the  purpose  of  bringing 
suit,  or  whether  he  acquired  it  in  a  bona  fide  manner  in  payment 
for  services  previously  rendered  to  his  ollent.  If  it  is  deoiaea 
to  go  ahead  with  the  suit,  the  oase  will  practically  be  in  Mr.  Mo 
Carter's  hands  as  the  other  defendants  have  intimated  that  they 
would  be  glad  to  have  him  represent  all  of  the  defendants.  He, 
however,  stated  that  Inasmuch  as  he  Ib  a  Hew  Jersey  lawyer  he 
would  like  to  have  Hew  York  counsel  associated  with  him,  which 
means  that  Judge  Seabury  would  also  be  in  the  oase.  The  latter 
is  a  heavy  oharger  and  Mr.  Scull  thinks  would  charge  $2000  for 
defending  the  case,  ana  that  it  could  hardly  be  expected  that 
Mr.  McCarter  would  charge  less  since  her  would  be  the  active  trial 


f 


II)  627 


counsel,  and  the  other  expenses  might  he  estimated  at  §1000,  making 
a  total  of  §5000.  This  apparently  would  he  the  cost  of  trying  out 
the  oase  on  the  champerty  defense  alone,  to  he  followed  hy  another 
trial  on  the  merLts  If  the  defendants  were  unsuccessful.  Mr.  Scull 
feels  quite  positive  that  we  should  win  on  the  champerty  defense, 
and  thinks  Mr.  McCarter  feels  that  way  also.  I  Btated  that  I  did 
not  feel  like  accepting  the  responsibility  of  deciding  whether  or 
not  we  should  endeavor  to  settle  hut  would  present  the  matter  to  you 
and  asked  what  recommendation  Mr.  McCarter  would  make.  He  replied 
that  if  you  were  sitting  there  In  his  offloe  and  he  were  talking  to 
you  In  person  he  would  say  that  If  you  feel  like  being  a  sport  and 
taking  a  chance  he  would  advise  you  to  defend  the  sultl  heoause  he 
did  not  feel  that  even  If  It.  should  go  against  you,  the  judgment 
could  he  much  If  any  more  than  the  amount  at  which  they  offer  to 
settle,  that  is,  §30,000.  He  also  said  that  If  It  was  a  question 
of  principle  with  you,  not  to  he  held  up  hy  what  he  considers  vir¬ 
tually  a  hlack-malllng  proposition  and  you  feel  that  it  is  a  case 
of  millions  for  defense  hut  not  one  cent  for  tribute,  then  he 
would  also  advise  you  to  fight  the  oase.  On  the  other  hand,  the 
easiest  way  out  of  It,  that  Is,  the  line  of  least  resistance,  if 
you.  have  no  feeling  In  the  matter,  would  be  to  settle  at  the 
amount  named,  your  share  of  which,  that  is,  one-fifth,  .would  he 
§6000,  plus  costs  not  to  exoeed  §200. 

Mr.  Scull  stated  that  when  the  case  was  on  before  and 
was  either  being  tried  or  about  to  he  tried,  the  plaintiff  offer¬ 
ed  to  settle  for  §15,000,  and  we  might  endeavor  to  beat  them  down 


-3- 


ID  627 


from' $30, 000  to  possibly  §20,000  now,  but  even  If  this  were  done 
It  would  save  the  Edison  Company  only  §2000  and  we  would  have  to 
pay  Mr.  McCarter  for  his  servloes  In  carrying  on  such  negotiations 
and  also  prepare  for  trial  If  v/e  turn  down  the  proposition  for 
settlement  whloh  Is  now  before  us  because  the  plaintiff  might 
refuse  to  accept  any  smaller  amount. 

Will  you,  therefore,  please  Indloate  what  you  would  like 
ito  have  us  do  as  regards  this  offer  of  settlement.  I  might  add 
that  In  oase  a  judgment  should  be  entered  In  this  suit  It  Is 
probable  that  It  could  be  divided  up  among  various  defendants 
under  an  agreement  to  contribute.  Inasmuch  as  the  suit  Is  In 
the  Southern  District  of  Mew  York  and  we  have  praotloally  no 
assets  In  that  DLstrlot  It  Is  likely  that  the  plaintiff  If  It 
became  necessary  to  enforce  the  judgment  by  execution,  would 
prooeed  against  some  of  the  other  defendants,  but  we  would  pay 
our  share  under  that  agreement. 

Enc. 

DH-ES 


Delos  Holden 


[ATTACHMENT] 


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[ATTACHMENT] 


Legal  Department  Records 
Motion  Pictures  -  Case  Files 

United  States  of  America  v.  Motion  Picture  Patents  Company  etal. 

This  folder  contains  material  pertaining  to  an  antitrust  suit  brought  by  the 
federal  government  against  the  Motion  Picture  Patents  Co.  The  case  was 
initiated  in  1912  in  the  U.S.  District  Court  for  the  Eastern  District  of 
Pennsylvania.  It  was  subsequently  appealed  to  the  U.S.  Supreme  Court.  The 
selected  items  include  the  government's  original  petition;  testimony  by  Frank 
L.  Dyer  at  hearings  held  in  New  York  City  in  November  1 91 3;  and  memoranda 
from  1915  briefing  Edison  on  the  progress  and  settlement  of  the  suit. 


.  AO 

iur,U.i 


In  the  District  Court  of  the  United  States  for  the 
Eastern  District  of  Pennsylvania. 

Tnn  United  States  op  America,  petitioner. 


ORIGINAL  PETITION 


ceoRce  w,  wickersham, 

Attorney  Oct 

JAMES  A.  TOWLER, 


REPRINE 


In  the  District  Court  of  the  United  States  for  the 
Eastern  Distriet  of  Pennsylvania. 


The  United  States  op  America,  petitioner,' 

Motion  Picture  Patents  Company  and 
others,  defendants. 


No.  — . 


Original  Petition. 

To  the  honorable  judges  of  the  District  Court  of  the  United 
States  for  the  Eastern  Distriet  of  Pennsylvania,  sitting  in 
equity: 

The  United  States  of  America,  by  John  C.  Swartley,  its 
attorney  for  the  eastern  district  of  Pennsylvania,  acting  under 
the  direction  of  the  Attorney  General,  brings  this  proceeding 
in  equity  against  Motion  Picture  Patents  Company,  General 

Film  Company,  Biograph  Company,  Thomas  A.  Edison - 

(Inc.),  Essanay  Film  Manufacturing  Company,  the  Kalem 
Company  (Inc.),  George  Kleine,  Lubin  Manufacturing  Com¬ 
pany,  Melies  Manufacturing  Company,  Pathd  Frfires,  the  Selig 
Polyscope  Company,  the  Yitagraph  Company  of  America,  I 
Armat  Moving  Picture  Company,  Frank  L,  Dyer,.  Henry  N. 
Marvin,  J.  J.  Kennedy,  William  Pelzer,  Samuel  Long,.  J.  A.  I 
Berst,  Sicgmund  Lubin,  Gaston .  Melies,  Albert  E.  Smith, 
George  K.  Spoor,  and  W.  N.  Selig. 

The  defendants  above-named,  engaged  in  interstate  and 
foreign  commerce  in  motion  pictures,  films,  cameras,  exhibit¬ 
ing  machines  and  other  articles  and  apparatus  used  in  the 
motion  picture  art,  are  violating  the  provisions  of  the  act  of 

'H*\  ^  ^  n  ^ ' 


ORIGINAL  PETITION. 


ORIGINAL  PETITION. 


Congress  passed  July  2,  1800,  entitled  “An  net  to  protect 
trade  and  commerce  against  unlawful  restraints  and  monop- 
f  olies,”  and  tliis  proceeding  is  instituted  to  prevent  and 
/  restrain  the  hereinafter  particularly  described  agreements, 
•  ■  contracts,  combinations,  and  conspiracies  in  restraint  of,  and 
V  restraints  upon,  interstate  and  foreign  trade  in  such  articles, 
the  attempts  to  monopolize  and  the  contracts,  combinations, 
and  conspiracies  to  monopolize,  and  the  existing  monopo¬ 
lizations  of  part  of  trade  and  commerce  among  the  several 
States  in  such  commodities. 

On  information  and  belief,  your  petitioner  nllcgcs  and 
shows: 


Motion  Picture  Patents  Company  is  a  corporation  organ¬ 
ized  under  the  laws  of  New  Jersey,  with  its  principal  offices 
at  80  Fifth  Avenue,  New  York  City. 

General  Film  Company  is  a  corporation  organized  under 
the  laws  of  the  State  of  Maine,  with  its  principal  offices  at  200 
Fifth  Avenue,  New  York  City. 

Thomas  A.  Edison  (Inc.)  is  a  New  Jersey  corporation, 
the  successor  to  all  the  rights  and  privileges  of  the  Edison 
Manufacturing  Company,  also  a  New  Jersey  corporation. 
The  principal  offices  of  Thomas  A.  Edison  (Inc.)  are  located 
at  Orange,  N..  J. 

Biograph  Company  is  a  corporation  organized  under 
the  laws  of  New  Jersey,  with  its  principal  offices  in  New 
York  City. 

Essanay  Film  Manufacturing  Company  is  a  corporation 
organized  under  the  laws  of  the  State  of  Illinois,  with  its 
principal  offices  at  Chicago,  Ill. 

Kalem  Company  (Inc.)  is  a  corporation  organized  under 
the  laws  of  the  State  of  New  York,  with  its  principal  offices 
at  New  York. 


Lubin  Manufacturing  Company  is  a  corporation  organized 
under  the  laws  of  the  State  of  Pennsylvania,  with  its  prin¬ 
cipal  offices  at  Philadelphia. 

Mclics  Manufacturing  Company  is  a  corporation  organ¬ 
ized  under  the  laws  of  the  State  of  New  York,  with  its 
principal  offices  at  New  York  City. 

Pathd  Friires  is  a  corporation  organized  under  the  laws 
of  the  State  of  New  Jersey,  with  its  principal  offices  at  New 
York  City. 

Selig  Polyscope  Compnny  is  a  corporation  organized 
under  the  laws  of  the  State  of  Illinois,  with  its  principal 
offices  at  Chicago. 

Vitagrapli  Company  of  America  is  a  corporation  organ¬ 
ized  under  the  laws  of  the  State  of  New  York,  with  its 
principal  offices  at  Brooklyn,  New  York. 

Armat  Moving  Picture  Compnny  is  a  corporation  organ¬ 
ized  under  the  laws  of  West  Virginia,  with  offices  in  the 
city  of  Washington,  D.  C. 

Said  defendants  will  bo  hereinafter  referred  to  as  “corpo¬ 
ration  defendants”  and  “defendants.” 

The  individuals  made  defendants  herein  and  hereinafter 
called  “individual  defendants”  and  “defendants”  have 
been  and  now  are  officers  and  directors  of  the  corporation 
defendants  as  hereinafter  Btated,  and  asj  supli  officers  and 
directors  have  participated  and  do  now  participate  in  the 
management  and  direction  of  the  business  of  the  corporation 
defendants,  and  have  been  and  are  now  responsible  therefor. 

Frank  L.  Dyer  lias  been  since  its  organization  president 
and  a  director  of  Motion  Picture  Patents  Company  and  a 
director  of  General  Film  Company  since  the  incoiporation 
of  the  latter  company.  He  is  president  of  Thomas  A. 
Edison  (Inc.)  and  was  president  or  vice  president  of  its  prede¬ 
cessor,  Edison  Manufacturing  Company,  during  the  period 
hereinafter  mentioned. 


4  OBIGINAL  PETITION. 

Henry  N.  Marvin  lias  been  since  its  organization  and  is 
now  vice  president  and  a  director  of  Motion  Picture  Patents 
Company.  He  is  vice  president  of  the  Biograpli  Company, 
and  held  that  office  during  the  period  hereinafter  mentioned. 

J.  J.  Kennedy  has  been  since  its  organization  and  is  now 
treasurer  and  a  director  of  Motion  Picture  Patents  Company, 
and  president  and  a  director  of  the  General  Film  Company 
since  the  incorporation  of  the  latter  company.  He  is  also 
president  of  the  Biograph  Company  and  held  that  office 
during  the  period  hereinafter  mentioned. 

7  William  Pelzer  has  been  for  several  years,  and  is  now, 
j  secretary  and  a  director  of  the  Motion  Picture  Patents  Com¬ 
pany,  and  secretary  of  the  General  Film  Company  since  the 
incorporation  of  the  latter  company.  He  is  also  an  officer 
of  Thomas  A.  Edison  (Inc.)  and  held  that  office  during  the 
period  hereinafter  mentioned. 

Samuel  Long  is  now  and  has  been  since  its  incorporation 
'  treasurer  and  a  director  of  tbe  General  Film  Company.  He 
.  is  president  and  a  director  of  Kalem  Company  and  held  that 
office  during  the  period  hereinafter  mentioned. 

J.  A.  Berst  is  now,  and  has  been  since  its  incorporation,  a 
director  of  the  General  Film  Company.  He  is  one  of  the 
officers  of  and  interested  in  Pathfi  Frhres  and  held  that 
office  during  the  period  hereinafter  mentioned. 

Siegmund  Lubinis  now,  and  has  been  since  its  incorpora¬ 
tion,  a  director  of  the  General  Film  Company,  and  he  is 
president  and  a  director  of  the  Lubin  Manufacturing  Com¬ 
pany  and  held  that  office  during. the  period  hereinafter 
mentioned.' 

Albert  E.  Smith  is  now,  and  has  been  since  its  incorpora¬ 
tion,  a  director  of  the  General  Film  Company.  He  is 
president  and  a  director  of  Vitagraph  Company  of  America 
and  held  that  office  during  the  period  hereinafter  mentioned. 


George  K.  Spoor  is  now,  and  has  been  since  its  incorpora¬ 
tion,  a  director  of  the  General  Film  Company.  He  is 
president  and  a  director  of  Essanay  Film  Manufacturing 
Company  and  held  that  office  during  tbe  period  hereinafter 
mentioned. 

W.  N.  Selig  is  now,  and  lias  been  since  its  incorporation, 
a  director  of  the  General  Film  Company,  and  he  is  president, 
a  director,  and  stockholder  of  the  Selig  Polyscope  Company, 
and  held  that  office  during  the  period  hereinafter  mentioned. 

George  Itleine  is  an  individual  residing  in  Chicago,  III., 
doing  business  in  his  own  name.  He  has  been  vice  presi¬ 
dent  and  a  director  of  General  Film  Company  since  its 
incorporation. 

Gaston  Melies  is  now,  and  has  been  since  its  incorporation, 
a  director  of  the  General  Film  Company,  and  he  is  also 
president  of  Melies  Manufacturing  Company,  having  held 
that  office  since  its  incorporation. 


The  object  of  this  suit  is  to  remove  tbe  restraints  which 
defendants  herein  have  imposed  upon  trade  and  commerce  in 
machines;  appliances^  and  apparatus  relating  to  the  motion- 
picture  art  and  upon  persons  engaged  in  such  trade  and 
commerce. 

A  moving  picture  or  a  picture  of  an  object  in  motion 
in  reality  consists  of  a  long  series  of  consecutive  snap  shots; 
or  instantaneous  pictures,  taken  one  after  the  other  of  the 
object  the  movement  of  which  it  is  desired  to  portray. 
These  pictures  are  recorded  nt  such  brief  intervals,  16  per 
second,  that  in  any  two  consecutive  pictures  there  is  no 
perceptible  change  in  the  position  of  the  object  which  is  in 
motion..  The  result  is  that  when,  the  series  of  pictures  is 
thrown  rapidly  upon  a  screen  by  means  of  a  projecting 
machine  the  illusion  of  movement  is  produced.  The  eye  in 


o  ORIGINAL  PETITION. 

reality  looks  upon  a  swift  succession  of  instantaneous  plioto- 
graplis  but  is  deceived  into  belicviiig  that  it  is  seeing  actual 
movement. 

Persons  engaged  in  trade  and  commerce  in  these  appliances 
may  be  divided  into  three  classes:  (1)  Manufacturers  of  mov¬ 
ing  picture  cameras,  films,  and  projecting  or  exhibiting  ma¬ 
chines;  (2)  rental  exchanges  doing  a  wholesale  or  jobbing 
business  in  distributing  these  machines  and  films  to  the 
exhibitors;  (3)  exhibitors  of  pictures  or  theatre  owners. 

With  the  development  of  the  motion-picture  business,  in 
the  last  20  years,  numerous  patents  relating  to  the  motion- 
picture  art  have  been  issued  by  the  United  States.  Some  of 
these  patents  have  related  to  the  mechanism  of  moving  pic¬ 
ture  cameras  or  have  been  patents  for  improvements  in  said 
mechanism;  many  patents  have  been  issued  relating  to  pro¬ 
jecting  or  exhibiting  machines  and  many  more  for  improve¬ 
ments  in  said  machines.  Some  of  these  patents  have  been 
sustained  by  the  courts  while  some  have  been  held  invalid 
either  by  reason  of  their  infringing  other  pntents  or  because 
they  related  to  matters  not  properly  patentable. 

Many  important  factors,  besides  the  character  of  the 
camera  and  projector,  enter  into  the  production  of  a  good 
motion  picture.  The  quality  and  composition  of  the  sensi¬ 
tized,  translucent  strip  of  celluloid  film  used  in  the  camera, 
known  as  the  negative  film;  the  perforating  of  the  negative 
film  with  mathematical  precision  before  it  is  placed  in  the 
camera  and  exposed;  the  developing  of  the  negative,  the 
developing  and  printing  of  the  positive  film  from  the  negative 
are  all  important  elements  to  the  perfection  of  which  years 
of  constant  experimenting  and  unremitting  research  have 
been  devoted. 

Of  all  commerce  relating  to  the  motion-picture  art  the 
commerce  in  positive  motion-picture  films  is  by  far  the  most 
considerable.  Between  two  and  one-half  and  three  million  feet 
of  pictures  are  printed  every  week  by  the  manufacturers  and 


ORIGINAL  PETITION,  7 

distributed  to  thousands  of  exhibitors  all  over  the  United 
States.  The  patrons  of  these  theatres  generally  demand  a 
daily  change  of  the  entire  picture  program,  and  therefore  it 
is  essential  to  every  exhibitor  that  the  source  of  supply  of 
pictures  bo  at  all  times  open  and  unrestrained. 

Within  the  last  ten  years  the  moving-picture  business  has 
reached  enormous  proportions.  It  is  probably  true  that  a 
sum  greatly  in  excess  of  §100,000,000  has  been  invested  in 
the  different  branches  of  the  business. 

In  the  year  1908  and  prior  thereto  there  were  ten  manu¬ 
facturers  or  importers  of  moving  pictures  in  the  United 
States;  that  is  to  say,  there  were  that  number  of  companies 
which  were  producing  or  importing  reels  of  motion  pictures 
and  selling  and  shipping  them  to  exchanges  scattered 
throughout  the  United  States,  the  latter  in  turn  distributing 
to  exhibitors  all  over  the  country.  There  were  at  that  time 
some  125  to  150  rental  exchanges,  and  6,000  or  more  ex¬ 
hibitors  in  the  United  States. 

In  this  commerce  in  positive  films  or  moving  pictures,  the 
manufacturers  at  that  time  competed  with  each  other  for 
the  business  of  the  exchanges,  and  all  the  exchanges  com¬ 
peted  for  the  business  of  the  exhibitor.  There  were  also  a 
number  of  manufacturers  of  cameras  and  of  projecting 
machines  competing  with  each  other. 

The  ten  manufacturers  of  films  and  their  respective 
places  of  business  from  which  they  sold  and  shipped  as  afore¬ 
said  were  the  following: 

American  Mutoscope  and  Biograph  Company,  New  York 
City,  a  New  Jersey  corporation,  now  known  ns  the  Biograpli 
Company. 

Edison  Manufacturing  Company,  Orange,  N.  J.,  a  New 
Jersey  corporation,  predecessor  of  Thomas  A.  Edison  (Inc.). 

Essanay  Film  Manufacturing  Company,  Chicago,  an  Illinois 
corporation. 

66498-12 - 2 


ORIGINAL 


Kalem  Company,  New  York  City,  a  New  York  corpora- 

Georgo  ICIeino,  Chicago,  a  large  importer  of  films,  repre¬ 
senting  nine  foreign  companies. 

Lubin  Manufacturing  Company,  Philadelphia,  Pa.,  a 
Pennsylvania  corporation. 

George  Melies  Manufacturing  Company,  Chicago,  Ill.,  an 
Illinois  corporation,  an  important  importer  of  foreign  films, 
and  also  a  producer  of  American  films. 

Pathfi  Frftres,  New  York  City  (factory,  Bound  Brook, 
N.  J.),  a  New  Jersey  corporation,  an  importer  of  films  and 
an  important  producer  of  domestic  films. 

Selig  Polyscope  Company,  Chicago,  an  Illinois  corpora¬ 
tion. 

Yitagraph  Company  of  America,  Brooklyn,- N.  Y.,  a  New 
York  corporation. 

All  these  producers  of  positive  moving-picture  films  were 
engaged  in  shipping  and  distributing  their  films  throughout 
the  United  States  to  the  rental  exchanges  of  which,  as  stated 
above,  there  were  between  125  and  150  in  the  country.  These 
rental  exchanges,  in  turn,  distributed  the  films  to  the  thou¬ 
sands  of  exhibitors,  and  in  so  doing  were  engaged  in  interstate 
commerce,  as  practically  every  rental  exchange  had  many 
customers  located  in  other  States  than  the  State  in  which  the 
rental  exchange  was  situated. 

At  the  time  mentioned,  and  prior  thereto,  keen  competi¬ 
tion  existed  in  the  motion-picture  business  and  commerce 
relating  thereto.  A  theater  owner  or  exhibitor  was  able  to 
buy  a  projecting  machine  from  the  Biograph  Company,  the 
Armat  Company  or  other  manufacturers,  and  exhibit,  thereon 
the  moving  pictures  of  any  manufacturer.  He  could  buy  for¬ 
eign  films  imported  by  said  Kleine  or  George  Melies  Com¬ 
pany,  or  American  films  from  any  one,  or  from  all  of  the 
manufacturers  of  films  above  named.  Interstate  and  foreign 


commerce  in  films,  moving  picture  cameras,  projectors  and 
other  appliances  relating  to  the  art  was  unrestrained  by  any 
combination  of  manufacturers.  At  that  time  films  were 
not  leased  but  sold  by  the  manufacturers  to  the  rental 
exchanges.  The  latter  in  turn  leased  but  did  not  sell  them 
to  the  exhibitors. 


In  the  year  1908  the  defendants  determined  to  destroy 
rnmnetirion  between  them,  to  monopolize  commerce  relating 
to  the  motion-picture  'aninigere- 

after  to  carry  on  said  commerce  according  to  the  terms  of 
the  unlawful  combination  which  they  were  to  create.  Briefly 
stated,  the  combination  was  to  take  the  following  form : 
Defendants  were  to  organize  a  company  which  should  do  no  I 
business  and  hold  no  property  other  than  certain  letters  S 
patent  which  were  to  be  transferred  to  it  by  the  defendants 
and  others.  This  company  was  to  acquire  all  patents  owned  j 
by  defendants  and  all  other  patents  relating  to  the  motion- 
picture  art. 

Each  of  the  10  manufacturers  was  to  take  from  this  new 
Patents  Company  a  license  to  produce  and  lease  motion-  pic¬ 
tures.  These  license  agreements  were  to  be  all  alike  and  their 
terms  were  to  be  arrived  at  by  agreement  of  all  defendants 
before  the  patents  were  assigned  by  them  to  the  new  com¬ 
pany.  In  the  license  agreements  were  to  be  incorporated 
conditions  and  restrictions  not  authorized  by  the  patent 
laws  and  regulating  the  conduct  of  the  business  of  the 
manufacturers  in  every  detail.  Under  these  agreements 
they  were  all  to  do  business  in  exactly  the  same  manner. 
They  were  to  lease  films  and  no  longer  sell  them ;  they  were 
to  lease  at  uniform  and  noncompetitive  prices  and  only  to 
such  rental  exchanges  ns  should  obtain  a  license  from  the 


ORIGINAL  PETITION. 


ORIGINAL  PETITION. 


new  Patents  Company  and  should  agree  to  handle  only  de¬ 
fendants’  films  and  to  sublease  only  to  exhibitors  licensed 
by  the  Patents  Company.  No  exhibitor  was  to  be  furnished 
films  who  did  not  agree  not  to  display  films  of  any  manu¬ 
facturer  other  than  defendants  and  not  to  use  projecting 
machines  not  licensed  by  the  Patents  Company.  Defend¬ 
ants  intended  by  virtue  of  these  agreements  to  acquire  the 
power  to  determine  who  should  engage  in  business  as  a 
producer  of  films  and  who  should  be  excluded  from  that 
business,  who  should  continue  to  operate  a  rental  exchange 
and  whose  rental-exchange  business  should  be  destroyed, 
who  should  remain  an  exhibitor  and  who  should  close  his 
theater,  who  should  in  the  future  open  a  new  motion-pic¬ 
ture  theater  and  who  should  be  barred  from  so  doing. 
The  intent  of  defendants  in  forming  the  new  company_an£L 
in_entcring  into  the  license  agreements  was  to  control,  re¬ 
strain,  and  monopolize  all  branches  of  commerce  among  the 
States  of  the  United  States  and  with  foreign  nations  relating 
to  the  motion-picture  art,  and  to  exclude  others  therefrom. 

Accordingly,  with  the  unlawful  purposes  just  mentioned, 
the  defendants,  acting  together,  incorporated  nnder  the  laws 
of  New  Jersey,  September  8,  1908,  Motion  Picture  Patents 
Company  (hereinafter  called  the  “Patents  Company”),  with 
.a  capital  stock  of  $100,000. 

The  articles  of  incorporation  declare  the  purposes  of  Motion 
Picture  Patents  Company  as  follows : 

The  objects  for  which  this  corporation  is  formed 
are  to  acquire  by  purchase,  lease,  payment  of  royal¬ 
ties  or  otherwise,  letters  patent,  inventions  and  im¬ 
provements  in  materials,  processes  and  apparatus 
relating  to  the  production  of  negatives  and  positives 
for  motion  pictures,  and  also  relating  to  the  photo¬ 
graphing,  developing,  reproducing,  projecting,  and 
exhibiting  of  scenes  and  objects  nt  rest  and  in  motion; 


to  mortgage,  sell,  lease,  dispose  of  by  agreement  or 
otherwise,  such  letters  patent,  licenses  under  letters 
patent,  and  improvements,  and  to  license  others  to 
use  the  inventions  covered  by  the  snid  letters  patent 
and  to  use  such  improvements;  to  purchase,  hold,  sell 
and  convey  such  real  and  personal  property  as  shall  be 
lawful  and  adapted  to  the  requirements  of  the  business 
of  the  company. 

The  certificate  of  incorporation  of  the  Motion  Picture  Pat¬ 
ents  Company,  hereinafter  called  the  Patents  Company,  is 
attached  hereto  as  a  part  of  this  petition  marked  Exhibit  1. 

On  December  18,  1908,  at  a  meeting  in  New  York  City 
attended  by  all  the  individual  defendants,  and  all  the  corpora¬ 
tion  defendants  being  represented  except  the  Melies  Manufac¬ 
turing  Co.,  defendants,  with  the  unlawful  purposes  above  men-  j 
tioned,  executed  (a)  preliminary  agreements  for  the  assignment 
of  the  patents  to  the  Patents  Company,  and  (6)  nine  license  | 
agreements  with  the  Patents  Company,  one  being  concluded 
by  each  of  the  manufacturers  (except  Melies  Co.,  which  signed 
a  similar  agreement  on  a  later  day)  with  the  Patents  Com¬ 
pany.  The  terms  of  all  these  agreements  had  been  arranged 
beforehand  at  numerous  conferences  between  the  manu¬ 
facturers. 

On  the  same  day,  according  to  their  previous  agreement, 
defendants  elected  the  following  officers  and  directors  of  the 
Patents  Company : 

President,  Frank  L.  Dyer,  also  vice  president  of  Edison') 
Manufacturing  Company.  ' 

Vice  president,  H.  N.  Marvin,  also  vice  president  of  Bio¬ 
graph  Company. 

Treasurer,  J.  J.  Kennedy,  also  president  of  Biograph 
Company. 

Secretary,  George  T.  Scull,  an  nttorney  of  the  Edison 
Manufacturing  Company.  . 


Those  officers  have  at  all  times  since  its  incorporation 
constituted  the  entire  hoard  of  directors  of  the  Patents 
Company,  except  that  William  Pelzer,  an  officer  of  Thomas 
A.  Edison  (Inc.),  has  been  for  some  time  past  and  is  now 
secretary  and  director  in  place  of  George  F.  Scull. 

All  of  the  stock  of  the  Patents  Company,  except  the  four 
qualifying  shares  held  by  the  four  directors,  has  been  owned 
ever  since  its  organization,  one-lialf  by  the  Edison  Manu¬ 
facturing  Company  and  its  successor,  Thomas  A.  Edison 
(Inc.),  and  the  other  half  by  the  Biograph  Company,  as 
provided  in  the  preliminary  agreements  for  the  assignment 
of  the  patents  to  be  next  described. 

IV. 


Preliminary  Agreements  for  tlie  Assignment 
of  the  Patents. 

There  were  four  of  these  agreements,  all  executed  as  above 
stnted,  December  18,  1908,  each  agreement  being  entered 
into  by  one  of  the  following  companies  with  the  Patents 
Company: 

'  1.  Edison  Manufacturing  Company, 

2.  Biograph  Company, 

3.  Armat  Moving  Picture  Machine  Company,  and 

4.  Vitagraph  Company  of  America. 

These  agreements  are  identical  as  to  all  the  essential 
features.  A  copy  of  the  Edison  agreement,  dated  December 
18,  1908,  is  attached  hereto  as  a  part  of  this  petition  and 
marked  Exhibit  2. 

After  reciting  that  the  Edison  Company  owns  Reissues 
letters  Patent  Nos.  12037  and  12192  and  that  the  Edison 
Company  desires  to  acquire  $50,000  of  the  $100,000  author¬ 
ized  capital  stock  of  the  Patents  Company,  in  consideration 
of  the  assignment  of  the  patents  last  named,  and  after 
further  reciting  that  the  Patents  Company  has  acquired  or 


will  acquire  certain  patents  (naming  them)  from  the  Vita-  \ 
graph  Company  of  America,  Biograph  Company,  and  the  \ 
Armat  Company,  and  that  the  Patents  Company  contem-  \ 
plates  deriving  royalties  of  three  kinds  (1)  from  manufac-  \ 
hirers  of  projecting  machines  licensed  under  the  patents  by 
the  Patents  Company  (machine  royalties),  (2)  from  exhib¬ 
itors,  for  the  use  of  projecting  machines  licensed  under  the 
patents  by  the  Patents  Company  (exhibitors’  royalties),  and 
(3)  from  manufacturers  and  importers  of  motion-picture 
films  licensed  under  Reissues  12037  and  12192  above  named 
(film  royalties),  the  Edison  preliminary  agreement  provides: 

(1)  The  Edison  Company  agrees  to  assign  reissue  patents  I 

12037'  and  12192  and  the  right  to  sue  for  past  infringement, 
and  the  Patents  Company  agrees  to  issue  500  shares  of 
stock  aggregating  $50,000.  (Paragraphs  9  and  10.)  J 

(2)  TlieJMisgnjCompany  agrees  not  to  ..pledge,,  sell,  qr_  I 

dispose  of  its  capital  stocirir'jhe_Pat.ents_CQmpany,  and  to  j 
deposit  its  certificates  with  a  trust  company,  to  he  named  j 

by  the  Patents  Company,  as  trustee,  and  to  instruct  the  j 

said  trustee  not  to  release,  transfer,  or  return  the  said  cer- 
tificates  so  deposited  without  the  consent  of  the  Biograpli  j 
and  Armat  Companies.  (Paragraph  14.)  1 

(3)  After  deducting:  from,  the  machine  royalties  a  royalty  j 

of  $1  a  machine;  to  be  paid  the  Vitagraph  Company,  and  )  j 
after  deducting  from  the  gross  exhibitors’  royalties  24  per  L  j 
cent  for_nnvment  to  the  licensed  manufacturers  and  importers  (  ! 
of  motion  pictures  other  thnn  the  Biograph  and  Edison  Com-  J 
panics,  and  after  deducting  the  expenses,  the  balance  is  to  J 
Iw  divided  ns  follows :  ■'  / 

(а)  To  the  Edison  Company  shall  he  assigned  and1  paid  an 
amount  efinnl  to1  the  net  film  royalties. 

(б)  The  remainder  up- to  an  amount  equal  to  the  net  .film 
royalties,  shall  be  assigned- and  paid1  to  the:  Biograpli  Com-/  j 
pony  and  the  Armat  Company,  respectively,  in.  the  proportion/ 

■  “i,  ^ 

X*  w«  i-  ^ V^T  - 

I  ,  .P  „  .  L.  lL0  WwA  l/l. 


14  oiiigiNal  petition. 

of  two-tliii'ds  to  die  Biograph  Company  and  one-third  to  the 
Armat  Company. 

(c)  If  any  balance  remains  after  the  foregoing  payments, 
it  shall  be  divided  and  paid  to  the  Edison  Company,  the 
Biograph'  Company,  and  the  Armat  Company  in  the  propor¬ 
tion  of  one-half  to  the  Edison  Company,  one-third  to  the 
Biograph  Company,  and  one-sixth  to  the  Armat  Company. 
(Paragraph  12.) 

(4)  Provision  is  made  for  the  continuation  of  the  agreement 
beyond  August,  1914,  the  date  of  the  expiration  of  the  patents 
which  the  Edison  Company  assigns,  for  it  is  provided  that 
on  August  13,  1915,  one  year  after  the  expiration  of  the 
patents,  and  at  the  end  of  each  year  thereafter,  the  Patents 
Company  shall  pay  to  the  trustee  who  holds  its  certificates  of 
stock  all  of  its  net  profits  for  the  preceding  year,  consisting 
of  net  machine  royalties,  net  exhibitors’  royalties,  and  “the 
net  sum  of  any  royalties  which  the  Patents  Company  may 
collect  in  lieu  of  the  present  film  royalties”  as  a  dividend 
upon  the  capital  stock  of  the  Patents  Company,  and  will  in¬ 
struct  the  trustee  to  divide  the  said  dividends  and  to  pay  to 
the  Edison  Company  therefrom  an  amount  equal  to  one-half 
of  such  dividend.  (Paragraph  13.) 

(5)  The  agreement  may  be  terminated — 

(o)  For  wilful  and  continued  breach  of  its  terms  by  either 
of  the  parties. 

(6)  If  the  Patents  Company  becomes  bankrupt  or  ceases 
doing  business. 

(o)  If  the  Patents  Company  is  dissolved  voluntarily  or 
otherwise. 

(d)  If  its  charter  is  repealed. 

Upon  termination  of  the  agreement  for  any  of  the  fore¬ 
going  causes,  all  the  right  in  Patents  12037  and  12192  shall 
ybe  reassigned  to  the  Edison  Company  by  the  Patents  Com- 
sVpany.  (Paragraph  15.) 


OHIO  INAL  PETITION.  15 

The  preliminary  agreement  of  the  Biograpli  Company 
with  the  Patents  Company  is  identical  with  that  executed 
by  the  Edison  Company,  except  that  it  provides  for  the 
assignment  of  different  patents,  and  also  provides  that  the 
Biograph  Company  shall  retain  the  right  (without  the  pay¬ 
ment  of  any  royalty  to  the  Patents  Company),  to  practice 
the  inventions  described  in  the  patents  which  it  assigns. 
This  agreement,  like  the  Edison  agreement,  stipulates  that 
upon  its  termination  the  Patents  Company  shall  reassign  the 
patents  to  the  Biograpli  Company. 

The  Armat  agreement  is  similar  except  that  the  Armat 
Company  receives  no  stock  in  the  Patents  Company  as  a  con¬ 
sideration  for  the  transfer  of  its  patents.  Like  the  others 
it  contains  a  provision  for  a  continuance  of  the  arrange¬ 
ment  beyond  1914,  and  for  a  reassignment  of  the  patents 
by  the  Patents  Company  to  the  Armat  Company  if  the 
agreement  is  terminated  for  any  of  the  reasons  above  stated. 

In  the  Vitagraph  agreement  the  Vitagraph  Company 
agrees  to  assign  six  patents  and  the  right  to  sue  for  past 
infringement,  but  it  reserves  the  right  to  practice  the 
inventions  described  in  said  patents  without  the  payment 
of  any  royalty  to  the  Patents  Company.  The  Patents 
Company  agrees  that  it  will  not  grant  any  license  to  manu¬ 
facture  exhibiting  or  projecting  machines  under  any 
patents  owned  by  it  and  covering  such  machines  unless 
such  licensee  shall  also  accept  a  license  to  manufacture  and 
sell  exhibiting  and  projecting  machines  under  the  Vita- 
graph  patents  whether  or  not  such  licensee  may  thereafter 
make  use  of  any  of  the  inventions  covered  by  said  Vita- 
graph  patents.  The  Patents  Company  agrees  to  pay  a 
royalty  of  ?!  on  each  machine  containing  the  inventions 
described  in  one  or  more  of  the  Vitagraph  patents,  a  royalty 
of  ?1  when  the  machine  is  cnpable  of  exhibiting  by  trans¬ 
mitted  light,  and  a  royalty  on  other  kinds  of  machines. 

65498—12 - 8 


ORIGINAL  PETITION. 


ORIGINA 


It  is  provided  that  tlxe  agreement  shall  continue  until 
the  expiration  of  all  the  Yitagraph  patents.  Upon  the 
termination  of  the  agreement  for  any  of  the  causes  named, 
the  Patents  Company  shall  reassign  the  patents  to  the 
Yitagraph  Company. 


The  Manufacturers’  license  Agreements  En¬ 
tered  Into  With  the  Motion  Picture  Pat¬ 
ents  Company. 


tially  identical  with  the  eight  other  license  agreements  exe¬ 
cuted  the  same  day,  provides,  in  brief : 

1.  The  licensee — that  is,  the  manufacturer  of  the  motion- 
picture  film — is  licensed  to  lease  the  film  only  on  condition 
that  it  be  used  in  exhibiting  or  projecting  machines  licensed 
by  the  licensor. 

2.  The  licensee  agrees  that  he  will  use  exclusively  sen¬ 
sitized  film  manufactured  by  a  manufacturer  authorized  by 
the  licensor,  and  that  he  will  buy  all  his  film  from  that  manu¬ 
facturer.  (Sec.  4.)  This  refers  to  the  Eastman  Kodak 
Company. 

3.  The  licensor  agrees  that  he  will  obligate  such  manu- 


On  the  same  day,  December  18,  1908,  with  the  unlawful 
purposes  above  mentioned,  each  of  the  ten  manufacturers 
named  on  pages  7-8,  supra  (except  the  Melics  Company, 
whose  president  joined  later  and  formed  another  company), 
hereinafter  called  Patents  Company,  licensees,  concluded 
with  the  Motion  Picture  Patents  Company  a  license 
agreement,  each  license  being  practically  identical  with 
every  other  license.  The  terms  of  these  license  agree¬ 
ments  had  been  determined  at  numerous  earlier  confer¬ 
ences  between  defendants.  Each  agreement  regulated  in 
every  detail  the  manner  in  which  the  manufacturer  should 
do  business,  which  was  to  he  the  same  for  all  the  manu- 
\  facturers.  Each  agreement  licensed^  the  manufacturer 
to  manufacture  and  use'  movingpifliuie  cameras  embody¬ 
ing  the  invention^  "Of  the  "patents  and  to  “manufacture, 
print, '"and  proaucrpositl’re~motion  pictures  embodying  the 
inventions  of  said  reissued  Letters  Patent  No.  12192  and  to 
lease  the  same  in  the  United  States  *  *  These 

agreements  were  licenses  under  the  camera  and  film  patents 
and  are  to  be  distinguished  from  the  licenses  to  the  manu¬ 
facturers  of  exhibiting  machines  to  be  later  described. 

A  copy  of  the  license  agreement  dated  December  18,  1908, 
between  the  Motion  Picture  Patents  Company  and  the 
American  Mutoscope  &  Biograpli  Company,  now  named 
the  Biograph  Company,  is  attached  hereto  as  a  part  of  this 
petition,  marked  “Exhibit  3.”  This  agreement,  substan- 


I 


facturer  not  to  sell  sensitized  film  to  anyone  but  the  licensees, 
except  a  small  per  cent,  which  may  be  supplied  by  the 
manufacturer  to  persons  who  do  not  make  motion  pictures 
of  the  standard  size.  (Sec.  4.) 

4.  The  licensee  agrees  to  pay  certain  royalties  on  the  film 
to  the  licensor.  (Sec.  4.)  This  amounts  to  approximately 
half  a  cent  per  foot,  subject  to  reductions  in  proportion  to 
sales.  These  royalties  are  called  the  “film  royalties.” 

5.  The  Patents  Company  agrees  to  collect  royalties  of  ?2 
a  week  from  all  exhibitors  using  motion-picture  projecting 
machines  embodying  the  inventions  described  in  the  letters 
patent  which  were  to  be  assigned  to.  the  Patents  Company. 
(Sec.  4.)  This  provision  is  to  apply  regardless  of  the  fact  that 
those  machines  had  already  been  sold  with  no  condition 
attached  and  bad  become  the  property  of  the  exhibitor.  The 
royalty  was  to  be  paid  on  all  machines  already  on  the  market. 
These  are  called  the  “exhibitors’  royalties.” 

6.  The  licensee  agrees  not  to  sell  any  motion-picture  film, 
but  only  to  lease  or  rent  the  same  to  licensed  exchanges  and 
in  accordance  with  the  terms  of  the  exchange  license  agree¬ 
ment  hereafter  described.  This  was  a  radical  departure  from 


18 


ORIGINAL  PETITION. 


ORIGINAL  PETITION. 


19 


the  trade  custom;  previously  manufacturers  liad  sold  films 
outright  and  had  not  leased  them. 

7.  The  liceusee  agrees  not  to  lease  or  dispose  of  motion  pic¬ 
tures  to  anyone  dealing  in  motion  pictures  which  are  not 
the  output  of  one  of  the  licensees.  (Sec.  6.) 

8.  The  licensee  agrees  to  mark  conspicuously  on  labels 
which  shall  be  placed  on  all  boxes  containing  positive  motion 
pictures  the  conditions  under  which  the  motion  pictures  are 
leased,  among  others  that  (a)  the  lessee,  i.  c.,  the  rental 
exchange,  shall  not  sell  but  sliall  only  have  the  right  to  sublet 
such  motion  picture;  (6)  the  lessee  shall  permit  such  motion 
pictures  to  be  exhibited  only  on  motion  picture  projecting 
machines  licensed  by  the  Motion  Picture  Patents  Company 
and  on  no  other  machines;  (c)  the  lessee  shall  not  sublet  such 
motion  picture  at  a  lower  subrental  price  than  that  agreed 
upon  (if  any)  in  the  contract  of  lease  between  the  lessee  nnd 
lessor;  {d)  a  violation  of  any  of  the  conditions  shall  entitle 
the  lessor,  i.  e.,  the  manufacturer,  to  immediate  possession  of 
the  motion  picture.  (Sec.  7.) 

9.  The  agreement  fixes  a  scale  of  minimum  prices  for  the 
lease  of  positive  pictures  by  the  manufacturers  to  the  rental 
exchanges,  and  also  provides : 

The  licensor  and  licensee  further  mutually  covenant 
nnd  agree  that  the  above  scale  of  minimum  prices  is 
to  remain  in  force  until  a  new:  scale  of  prices  is  adopted, 
each  such  new  scale  to  be  adopted  during  the  contin¬ 
uance  of  this  agreement  by  a  majority  vote,  to  be 
forthwith  communicated  to  the  licensor,  of  the  licensee 
nnd  the  several  additional  licensees  hereinafter  pro¬ 
vided  for,  or  such  of  them  as  may  at  the  time  be 
licensees,  on  the  basis  of  one  vote'  for  each  1,000 
running  feet  of  new  subjects.  (Sec.  9.) 

10.  The  licensee  agrees  not  to  lease  motion  pictures  either 
directly  or  indirectly  at  lower  prices  than  those  fixed  and 
provided  for  in  the  agreement.  (Sec.  13.) 


11.  It  is  agreed  that  the  subleasing  prices  for  the  sub¬ 
leasing  of  pictures  shall  be  fixed  by  a  majority  vote  of  the 
licensees.  (Sec.  17.) 

12.  The  licensee  agrees  not  to  dispose  of  positive 
motion  pictures  except  by  lease,  as  above  described,  or  by 
sale  for  export  only,  and  also  to  refrain  from  supplying 
motion  pictures  for  use  with  any  exhibiting  or  projecting 
machine,  the  license  for  which  has  been  terminated  by  the 
licensor,  nnd  also  to  refrain  from  supplying  motion  pictures 
to  any  lessee  who  may  sublet  such  motion  pictures  to  persons 
using  the  same  for  giving  exhibitions  thereof  on  exhibiting 
machines  not  licensed  by  the  licensor  or  the  license  for  which 
has  been  terminated.  (Sec.  18.) 

13.  The  parties  agree  that  no  person  other  than  the  nine 
hereinbefore  referred  to  shall  obtain  a  license  except  by  a 
majority  vote  of  the  licensees,  on  the  basis  of  one  vote  for 
each  thousand  running  feet  of  new  subjects.  (Sec.  20.) 

14.  The  licensor  agrees  that  it  will  issue  licenses  to  make 
and  sell  exhibiting  or  projecting  machines  containing  the 
inventions  described  in  the  letters  patent  assigned,  but  that 
it  will  not  license  any  person  except  upon  the  condition  that 
the  sale  and  purchase  of  such  machine  gives  only  the  right 
to  use  it  solely  for  exhibiting  motion  pictures  leased  by  a 
licensee  of  the  licensor.  (Sec.  20.) 

15.  The  licensor  agrees  to  charge  a  royalty  of  §5.00  on 
every  such  machine.  These  are  called  the  “machine  royal¬ 
ties.” 

16.  The  licensor  agrees  to  license  the  licensee  to  make 
and  sell  exhibiting  machines.  (Sec.  20.) 

17.  It  is  provided  that  the  licensee  may  renew  this  agree¬ 
ment  by  giving  notice  to  the  licensor  before  April  20,  of 
each  year  until  August,  1919,  the  date  of  the  expiration  of 
the  Letters  Patent  707934,  known  ns  the  Latlmm  “loop” 
patent.  (Sec.  21.)  This  is  a  patent  relating  to  part  of  the 
mechanism  of  the  camera  nnd  projector. 


ORIGINAL  PETITION. 


ORIGINAL  PETITION. 


As  previously  stated,  the  Patents  Company  entered  into 
substantially  the  same  agreement  with  each  of  the  nine 
manufacturers.  George  Kleine,  one  of  the  nine,  but  an 
importer  and  not  a  manufacturer,  was  licensed  to  import 
positive  films,  but  the  amount  he  was  allowed  to  import 
was  limited  to  3,000  running  feet  of  new  subjects  per  week, 
and  he  agreed  to  confine  his  purchases  to  two  foreign 
manufacturers,  Gaumont  and  Urban.  Prior  to  this  license 
arrangement  Kleine  had  imported  the  films  of  nine  or  ten 
foreign  manufacturers  and  amounts  largely  in  excess  of 
3,000  feet  per  week. 

A  few  months  later  the  Patents  Company,  by  agreement 
of  tbe  nine  manufacturers,  voting  as  provided  in  paragraph 
13  supra  (section  20  of  the  license  agreement)  licensed 
defendants  Gaston  and  George  Melies  to  import  not  to  ex¬ 
ceed  1,000  feet  of  new  subjects  per  week  made  in  Prance 
by  George  Melies.  Said  two  individual  defendants  are  now 
doing  business  in  the  name  of  the  Melies  Manufacturing  Co., 
corporation  defendant,  which  company  has  the  benefit  of 
the  license  granted  Messrs.  Melies. 

VI. 

The  Rental  Exchange  Agreements. 

As  stated  above  (supra  p.  IT,  par.  0)  the  manufacturers’ 
license  agreement  requires  the  manufacturer  to  lease  film 
to  rental  exchanges  in  accordance  with  the  terms  of  an 
exchange  license  agreement.  In  other  words,  the  manufac¬ 
turers,  on  December  18,  1908,  adopted,  and  thereafter  used, 
a  uniform  contract  in  the  distribution  of  films  to  the  rental 
exchanges.  No  company  would  thereafter  lease  or  consign 
films  to  any  rental  exchange  which  had  not  signed  one  of 
these  so-called  license  agreements  with  the  Patents  Com¬ 
pany;  furthermore,  every  rental  exchange  was  not  afforded 


an  opportunity  to  enter  into  such  an  agreement,  for  the 
defendants,  acting  through  the  Patents  Company,  refused 
licenses  to  a  large  number  of  the  rental  exchanges.  Most 
of  these  were  driven  out  of  business.  To  about  one  hun¬ 
dred  of  the  rental  exchanges  the  Patents  Company  granted 
licenses.  Under  the  terms  of  these  agreements  the  Patents 
Company  reserves  the  right  to  terminate  the  license  at  any 
time  without  cause  on  fourteen  days  notice  by  it,  and  to 
cancel  the  agreement  at  once  on  breach  of  any  of  its 
terms  by  the  rental  exchange.  After  such  termination  of 
an  agreement  the  exchange  can  not  obtain  films  from  any 
of  the  licensed  manufacturers.  These  agreements  de¬ 
stroyed  all  competition  between  the  rental  exchanges  for 
they  prescribed  the  manner  in  which  the  exchange  should  do 
business,  which  was  made  the  same  for  all  exchanges.  There¬ 
after  the  defendants,  acting  through  the  Patents  Company, 
prevented  the  exchanges  from  competing  with  each  other 
for  the  business  of  tbe  exhibitors  by  prohibiting  any  two 
exchanges  from  serving  the  same  exhibitor. 

A  copy  of  the  exchange  license  agreement  between'  the 
Patents  Company  and  the  rental  exchange  is  attached  hereto 
as  a  part  of  this  petition,  marked  “Exhibit  4.” 

After  enumerating  the  patents  owned  by  the  Patents 
Company,  and  reciting  that  the  Patents  Company  has 
licensed  nine  manufacturers,  naming  them,  tc  manufacture 
or  import  motion  pictures,,  and  to  lease  licensed  motion 
pictures  for  use  on.  projecting  machines  licensed .  by  the 
licensor,  the  Motion  Picture  Patents  Company,  licenses  the 
rental  exchange  under  reissued  letters  Patent  12192;  the 
film  patent,  to  lease  licensed  motion  pictures!  from  the 
licensed  manufacturers' and  importers,  and  to  sublet-  said 
licensed  motion  pictures  for  use  only  on  projecting  machines 
licensed  by  the  licensor  under  . letters  patent  owned  by  it. 


OBIGINAL  PETITION. 


ORIGINAL  PETITION. 


23 


The  licensee,  i.  e.,  the  rental  exchange,  agrees  as  follows: 

(1)  Not  to  buy,  lease,  or  otherwise  obtain  any  motion 
pictures  other  than  licensed  motion  pictures,  and  to  dispose 
of  motion  pictures  only  by  subleasing  under  the  conditions 
set  forth  in  the  contract.  (Condition  1.) 

(2)  The  ownership  of  each  licensed  motion  picture  is  to 
remain  in  the  licensed  manufacturer.  (Condition  2.) 

(3)  The  licensee  shall  not  sell  or  exhibit  licensed  motion 
pictures,  but  shall  only  sublet  the  same,  and  only  to  exhibi¬ 
tors  who  shall  exclusively  exhibit  licensed  motion  pictures. 
(Condition  3.) 

(4)  The  licensee  shall  not  sell,  rent,  or  otherwise  dispose  of 
any  licensed  motion  pictures  to  any  person  engaged  in  selling 
or  renting  motion  picture  films.  (Condition  G.) 

(5)  The  licensee  shall  not  sell  or  dispose  of  motion  pictures 
to  any  person  in  the  exhibition  business  who  may  have  vio¬ 
lated  any  of  the  conditions  imposed  by  the  licensor  through 
any  of  its  licensees  and  of  which  violation  the  licensee  may 
have  had  notice.  (Condition  10.) 

(6)  The  licensee  shall  not  sublet  licensed  motion  pictures 
to  any  exhibitor  unless  a  contract  with  said  exhibitor  satis¬ 
factory  in  form  to  the  licensor,  i.  e.,  the  Patents  Company,  is 
first  executed,  and  unless  each  motion  picture  projecting 
machine  on  which  the  licensed  motion  pictures  are  to  be  used 
by  such  exhibitor  is  regularly  licensed  by  the  Motion  Picture 
Patents  Company  and  the  license  fees  therefor  have  been 
paid.  (Conditions  li  and  12.)  The  license  fee  is  ?2  a  week 
on  every  projector  owned  by  the  exhibitor. 

(7)  The  licensee  or  rental  exchange  is  required  to  mail  to 
the  Patents  Company  a  list,  giving  the  name  of  each  exhibitor 
supplied  with  pictures  by  the  rental  exchange.  (Condition 
12.)  The  rental  exchanges  thereafter  were  not  allowed  to 
supply  the  same  exhibitors;  the  latter  were  apportioned 
among  the  licensed  exchanges.  This  paragraph  (No.  12)  in 
effect  prevents  the  rental  exchanges  from  subleasing  pictures 


to  a  new  exhibitor  until  that  exhibitor  has  received  the 
approval  of  the  Patents  Company;  by  it  the  latter  company 
is  enabled  to  determine  who  shall  become  an  exhibitor. 

(8)  The  licensor  agrees  that  before  licensing  any  person 
in  the  United  States  to  lease  licensed  motion  pictures  from 
licensed  manufacturers,  i.  e.,  to  be  a  rental  exchange,  it  will 
exact  from  each  such  licensee  an  agreement  similar  in  terms 
to  the  present  agreement.  (Condition  1G.) 

(9)  The  licensor  may  terminate  the  agreement  on  fourteen 
days’  written  notice  to  the  licensee  of  its  intention  so  to  do, 
or  immediately  upon  breach  of  any  of  its  conditions.  (Con¬ 
dition  ID.) 

(10)  The  terms  and  conditions  of  the  license  may  be 
changed  at  the  option  of  the  licensor  upon  fourteen  days’ 
written  notice  to  the  licensee.  (Condition  20.) 

(11)  The  licensee  shall  return  to  each  licensed  manufac¬ 
turer  on  the  first  day  of  every  month,  commencing  seven 
months  from  the  first  day  of  the  month  on  which  the  agree¬ 
ment  is  executed,  an  amount  of  positive  motion  picture  film 
in  running  feet  equivalent  to  that  obtained  the  seventh 
preceding  month.  (Condition  9.) 

(12)  The  leasing  prices  are  stated  in  the  agreement. 
(Condition  20.)  These  become  the  same  for  every  rental  ex¬ 
change  in  the  United  States. 

The  effect  of  these  rental  exchange  agreements  was  to 
place  all  the  rental  exchanges  at  the  mercy  of  defendants  and 
the  Patents  Company.  This  company  would  not  allow 
exhibitors  to  lease  from  different  exchanges,  blit  required 
each  exhibitor  to  obtain  his  entire  supply  of  films  from  one 
exchange.  In  this  respect  competition  between  rental  ex¬ 
changes  was  eliminated.  Each  rental  exchange  paid  the 
same  for  his  films  as  every  other  exchange.  To-day  each 
of  the  ten  Patents  Company,  licensees,  leases  its  films  at  the 
same  prices  and  on  the  same  terms  ns  the  other  nine  licensees. 

65498—12 - 4 


ORIGINAL  PETITION. 


2i  ORIGINAL  PETITION. 

VII. 

Licensed  Exhibitors. 

After  January  1,  1909,  the  defendants  commenced  to  do 
business  in  accordance  with  the  terms  of  the  unlawful  com¬ 
bination  which  they  had  formed  and  in  which  they  are  now 
engaged,  and  thereafter  not  one  of  the  thousands  of  theater 
owners  or  exhibitors  in  the  United  States  could  obtain  for 
exhibition  purposes  a  motion  picture  manufactured  by  any 
of  the  ten  manufacturers,  comprising  all  the  manufactur¬ 
ers  and  importers  at  that  time  doing  business  in  the  United 
States,  unless  the  Patent  Company  recognized  him  and  gave 
his  name  as  a  licensed  exhibitor  to  the  licensed  exchanges. 
In  order  to  secure  a  license,  the  exhibitor  has  to  obligate 
himself  to'  use  upon  his  machines  only  pictures  manu¬ 
factured  by  the  licensed  manufacturers.  The  exhibitor  has 
to  pay  oh  every  exhibiting- machine  owned  by  him  ?2  a  week 
to  the  Patents  Company;  this  so-called  exhibitor’s  royalty 
applies  to  machines  sold  years  before  to  the  exhibitor 
without  any  conditions  being  attached  to  the  sale.  No  two 
exchanges  are  permitted  to  serve  the  same  exhibitor  during 
the  same  period.  Breach  by  a  rental  exchange  or  by  an 
exhibitor  of  any  of  the  conditions  imposed  by  the  defendants 
through  the  Patents  Company  subjects  such  rental  exchange 
or  exhibitor  to  an  immediate  cancellation  of  his  license.  The 
power  and  monopoly  of  the  defendants  became  absolute.  De¬ 
fendants,  through  the  Patents  Company,  were  enabled  to  and 
did  determine  whether  new  motion  picture  theatres  should  or 
should  not  be  opened  and  whether  old  ones  should  be  closed, 
although  defendants  had  no  proprietary  interest  in  Buck  thea¬ 
ters.  This  power  defendants  have  exercised  and  continue  to 
exercise  arbitrarily  and  unreasonably  through  the  Patents 
•  Company.  Whenever  the  Patents  Company  cancels  the 
license  of  a  rental  exchange  it  sends  notice  thereof  to  all  the 


customers  of  such  exchange,  and  likewise  when  it  cancels 
the  license  of  an  exhibitor  notice  is  sent  to  the  rental 
exchanges.  Thereafter  neither  such  rental  exchange  nor 
exhibitor  can  obtain  anywhere  in  the  United  States  the 
product  of  any  of  the  ten  manufacturers  defendants  herein. 

All  the  oppressive  restrictions  and  unlawful  conditions 
contained  in  the  agreements  and  pointed  out  in  the  preced¬ 
ing  paragraphs  of  this  petition,  and  to  be  noted  in  the  para¬ 
graphs  to  follow,  defendants  have  observed  and  enforced  at 
all  times  since  they  engaged  in  their  unlawful  combination, 
and  they  will  continue  to  enforce  said  unreasonable  and 
oppressive  restraints  and  conditions  unless  restrained  by 
this  honorable  court. 

VIII. 

license  Agreements  With  Manufacturers  -of 
Exhibiting  Machines. 

Defendants  on  December  18,  1908,  not  only  by-  means  of 
the  Patents  Company  and  the  so-called  license  agreements 
bound  together  all  manufacturers  of  moving-picture  cameras 
and  films  into  one  combination,  but  also  with  the  some  un¬ 
lawful  purpose,  and  as  a  further  means  to  monopolize  trade, 
devised  license  agreements  i  between  ,  the  Patents  •  Company 
and  each  manufacturer  of  -projecting  or  exhibiting  machines. 
The  license  agreements  of  December  18,  •  1908,  recite  that 
the  parties  are  intending  to  conclude  other  agreements  relat¬ 
ing  to  projecting  machines.  (  Supra,  p.  19.)  The  agreements 
between  the  Patents  Company  and  projecting  , machine  manu¬ 
facturers  contain  many  of  .the  restrictive  provisions  incor¬ 
porated  in  the  license  agreements  under  the' camera- and  film 
patents 'referred  to  above.  (Supra,  pp.'  1G  to  19.)  Among 
other  things,  these  agreements -provide  that  every:  exhibiting 
machine  shall  be  sold  subject  to  the  condition  that  it.  shall 
be  used  solely  for  exhibiting  motion  pictures  containing  the 


ORIGINAL  PETITION'. 


ORIGINAL  PETITION. 


invention  of  the  reissued  patent  12192;  that  is  to  say,  every 
machine  is  to  be  sold  subject  to  the  condition  that  it  shall 
he  used  only  with  films  supplied  by  one  of  the  ten  licensed 
manufacturers. 

These  agreements  also  fix  the  prices  at  which  all  pro¬ 
jecting  machines  are  to  be  sold;  these  prices  are  made  the 
same  for  all— that  is  to  say,  all  competition  in  interstate 
commerce  between  the  various  manufacturers  of  projecting 
machines  as  to  the  prices  and  terms  of  sale  of  their  respective 
machines  is  destroyed  by  establishing  uniform  prices.  The 
agreements  provide  that  the  manufacturer  shall  pay  the 
Patents  Company  a  royalty  of  ?5  on  every  machine,  called 
“machine  royalties.” 

The  Patents  Company,  acting  under  the  direction  and 
domination  and  in  the  interest  of  defendants,  early  in 
1909  concluded  license  agreements  of  the  character  indicated 
with  all  the  companies  at  that  time  manufacturing  and  sell¬ 
ing  projecting  machines  in  the  United  States,  to  wit: 

American  Mutoscope  and  Biograph  Co.,  Apr.  20, 
1909. 

American  Moving  Picture  Machine  Company,  Fob. 
13,  1909. 

Armat  Moving  Picture  Co.,  Jan.  7,  1909. 

Edengraff  Mfg.  Co.,  Jan.  7,  1909. 

Edison  Mfg.  Co.,  Jan.  7,  1909. 

Enterprise  Optical  Mfg.  Co.,  Jan.  7,  1909. 

Lubin  Mfg.  Co.,  Jan.  7,  1909. 

Nicholas  Power,  Jan.  7, 1909. 

Eberliard  Schneider,  Jan.  7, 1909. 

Selig  Polyscope  Co.,  Jan.  7, 1909. 

Spoor  &  Co.,  Jan.  7,  1909. 

Vitagraph  Co.  of  America,  Jan.  7, 1909. 

The  companies  just  named,  located  in  different  States, 
were  selling  and  shipping  projecting  and  exhibiting  machines 
in  interstate  commerce  throughout  the  United  States. 


A  copy  of  the  license  agreement  under  the  exhibiting- 
machine  patents  between  the  Motion  Picture  Patents  Com¬ 
pany  and  the  Armat  Moving  Picture  Company  is  attached 
hereto  as  a  part  of  this  petition  marked  “Exliibii  5.”  This 
agreement  is  similar  to  those  issued  to  the  other  companies 
named  above. 

IX. 

General  Film  Company. 

As  has  been  pointed  out  above  (supra,  p.  C),  persons 
engaged  in  the  motion-picture  business  belong  to  one  of 
three  classes:  (1)  Manufacturers  of  cameras,  films,  and  other 
appliances  relating  to  the  motion-picture  art,  and  distribu¬ 
tors  of  these  articles  to  the  rental  exchanges;  (2)  rental 
exchanges  or  wholesale  distributors,  constituting  the  source 
of  supply  of  the  exhibitor;  (3)  exhibitors  of  moving  pictures. 
By  means  of  the  Motion  Picture  Patents  Company  and  the 
agreements  above  described,  defendants  restrained  the  com¬ 
merce  of  the  manufacturers  and  dominated  and  controlled 
the  business  of  the  rental  exchanges  and  exhibitors.  On  or 
about  April,  1910,  defendants  set  out  to  monopolize  the 
bnsiness  of  all  the  rental  exchanges  in  the  United  States, 
their  purpose  being  to  drive  out  of  business  all  persons  so 
engaged  and  to  absorb  to  themselves  the  profits  theretofore 
made  therein.  This  unlawful  end  they  accomplished  in  the 
manner  to  be  presently  described  by  means  of  a  corporation 
organized  by  them  for  that  purpose,  General  Film  Company, 
corporation  defendant. 

In  April,  1910,  defendants,  with  an  intent  to  monopolize 
the  rental  exchange  business,  organized  the  General  Fiim 
Company,  a  Maine  corporation,  ‘  capital  stock  $2, 000, 000, 
reduced  March,  1911,  to  ?1, 000, 000,  preferred  $800,000,  com¬ 
mon  $200,000,  common  stock  alone  having  voting  rights 


28 


ORIGINAL  PETITION. 


ORIGINAL  PETITION. 


29 


and  all  being  owned  by  defendants.  Each  of  the  incorpora¬ 
tors  was  connected  with  and  interested  in  the  business  of 
one  of  the  ten  Patents  Company,  licensees. 

The  following  were  at  once  elected  officers  and  directors, 
each  officer  and  director  being  an  officer  of  and  largely 
interested  in  the  business  of  one  of  the  ten  manufacturers: 

President,  J.  J.  Kennedy,  president  of  the  Biograph  Com¬ 
pany,  and  treasurer  and  director  of  the  Motion  Picture 
Patents  Company  since  its  organization. 

Vice  president,  George  Kleine,  owning  the  business  of 
George  Kleine,  hereinabove  referred  to. 

Treasurer,  Samuel  Long,  president  of  the  Kalem  Company. 

Secretary,  William  Pelzer,  also  secretary  of  the  Motion 
Picture  Patents  Company,  and  an  officer  of  the  Edison  Manu¬ 
facturing  Company. 

The  following  were  elected  directors: 

Frank  L.  Dyer,  president  of  the  Motion  Picture  Patents 
Company  and  vice  president  of  the  Edison  Manufacturing 
Company. 

J.  A.  Berst,  vice  president  of  Patlifi  Frbres. 

J.  J.  Kennedy,  president  of  the  Biograph  Company  and 
treasurer  of  the  Patents  Company. 

Siegmund  Lubin,  president  of  -the  Lubin  Manufacturing 
Company. 

Samuel  Long,  president  of  the  Kalem  Company. 

Gaston  Melics,  president  of  Melics  Manufacturing  Com¬ 
pany. 

Albert  E.  Smith,  president  of  Vitagraph  Company  of 
America. 

George  K.  Spoor,  president  of  Essanay  Film  Manufactur¬ 
ing  Company. 

W.  N.  S'elig,  president  of  the  Selig  Polyscope  Company. 

George  Kleine,  one  of  the  ten  licensed  manufacturers. 


Each  one  of  the  ten  Patents  Company,  licensees,  was  repre¬ 
sented  by  one  director  on  the  board  of  the  General  Film 
Company,  and  only  representatives  of  those  companies 
were  elected  to  that  board. 

The  articles  of  incorporation  of  the  General  Film  Com¬ 
pany  recite  among  its  purposes  the  following : 

For  the  purpose  of  buying,  selling,  or  otherwise 
acquiring  or  disposing  of  letters  patent  and  licenses 
under  letters  patent  for  inventions  pertaining  to  the 
production  and  use  of  photographic  or  other  negatives, 
and  photographic  or  other  positives  of  objects  at  rest 
and  objects  in  motion;  manufacturing,  buying,  using, 
selling,  or  otherwise  acqniring  or  disposing  of  appa¬ 
ratus,  materials,  etc.,  equipping  theatres,  halls,  and 
similar  places  of  amusement  *  *  *. 

A  copy  of  the  charter  of  General  Film  Company  is 
attached  hereto  as  a  part  of  this  petition,  marked  “Ex¬ 
hibit  6.” 

Before  the  organization  of  the  General  Film  Company 
defendants,  who  were  to  be  its  officers  and  directors,  had 
determined  the  amount  of  money  the  new  company  should 
expend  in  order  to  acquire,  by  purchase,  by  driving  out  of 
business,  by  cancellation  of  licenses  by  the  Patents  Com¬ 
pany,  or  by  other  appropriate  methods,  all  the  licensed 
rental  exchanges,  to  wit,  §2,480,000  cash  and  §988,800  in 
preferred  stock  in  the  new  company.  Something  less  than 
that  amount  defendants  in  fact  expended  before  January, 
1912,  in  bringing  to  a  successful  conclusion  the  unlawful  plan 
which  they  had  set  out  to  accomplish. 

As  has  been  pointed  out  previously  (supra,  23),  defendants, 
through  the  Patents  Company,  had  incorporated  in  the 
license  agreements  with  the  rental  exchanges  a  provision 
authorizing  the  Patents  Company  to  terminate  the  agree¬ 
ment  at  any  time  upon  two  weeks’  notice,  and  immediately 


OIIIGINAL  PETITION. 


ORIGINAL  PETITION. 


upon  breach  of  any  of  its  terms.  This  provision  defendants 
after  the  formation  of  the  General  Film  Company  proceeded 
at  once  to  invoke.  Between  April,  1910,  and  January  1, 
1912,  defendants,  through  the  General  Film  Company, 
acquired  the  business  or  cancelled  the  license  of  every 
licensed  rental  exchange  in  the  United  States,  except  one, 
paying  therefor  $2,243,089  in  cash  and  notes  and  $794,800 
in  preferred  stock.  During  this  period  the  General  Film 
Company  purchased  57  exchanges,  paying  therefor  the 
sum  just  stated.  Since  its  organization  the  Patents  Com¬ 
pany  has  cancelled  the  licenses  of  and  driven  out  of  business 
42  exchanges,  of  which  21  were  cancelled  after  the  General 
Film  Company  commenced  business.  The  result  of  the 
conspiracy  of  defendants  is  that  to-day,  of  all  the  exchanges 
doing  business  in  the  United  States  December  18,  1908, 
only  one,  the  Greater  New  York  Film  Company,  snrvives. 
The  latter  company  refused  to  sell  out,  whereupon  the 
defendants,  through  the  Patents  Company,  cancelled  its 
license,  but  under  the  protection  of  a  decree  issued  by  the 
United  States  District  Court  in  New  York  against  defend¬ 
ants  it  is  still  able  to  obtain  the  films  of  defendants. 

The  General  Film  Company  was  incorporated  by  defend¬ 
ants  solely  as  an  unlawful  instrumentality  to  effect  the 
illegal  purposes  of  defendants,  and  in  order  that  it,  in  coop¬ 
eration  with  the  Motion  Picture  Patents  Company,  might 
drive  out  of  business  and  interstate  and  foreign  commerce 
in  the  United  States  all  rental  exchanges  and  absorb  their 
businesses  and  profits  and  thereby  enable  the  defendants  to 
further  monopolize  commerce  relating  to  the  motion-picture 
art.  The  General  Film  Company  became  on  its  incorpora¬ 
tion  and  has  ever  since  been  a  combination  in  restraint  of 
trade  and  commerce  between  the  States  and  a  monopoliza¬ 
tion  thereof. 


31 
X. 

Agreement  Between  Motion  Picture  Patents 
Company  and  General  Film  Company. 

Motion  Picture  Patents  Company  and  General  Film  Com¬ 
pany,  acting  under  the  direction  and  domination  of  the  in¬ 
dividual  and  other  corporation  defendants,  with  the  unlaw¬ 
ful  purposes  hereinabove  described,  entered  into  an  agree¬ 
ment  April  21,  1910,  unlawfully  and  unreasonably  restrain¬ 
ing  the  interstate  trade  of  the  General  Film  Company  and  of 
the  10  manufacturers,  to  the  execution  of  which  agree¬ 
ment  each  of  the  10  Patents  Company  licensees  assented 
in  writing  on  the  same  day.  A  copy  of  that  agreement, 
dated  April  21,  1910,  is  attached  to  this  petition  as  a  part 
hereof,  marked  Exhibit  7.  Defendants  have  observed  and 
carried  out  said  agreement  since  its  execution  and  they  are 
now  conducting  their  several  businesses  in  accordance  with 
and  in  conformity  to  the  unlawful  terms  and  conditions  es¬ 
tablished  by  said  agreement.  In  brief,  the  agreement,  Ex-' 
Mbit  7,  provides: 

(1)  The  Patents  Company  grants  to  the  General  Film 
Company  in  the  United  States  a  license  to  have  positive 
motion  pictures  manufactured  for  it  by  the  Patents  Com¬ 
pany  licensees,  and  to  purchase  positive  motion  pictures 
manufactured  in  foreign  countries,  and  to  lease  such  positive 
motion  pictures  provided  they  are  leased  subject  to  the  con¬ 
dition  that  they  be  used  solely  in  exhibiting  or  projecting 
machines  containing  the  inventions  or  some  of  them  of  the 
letters  patent  owned  by  the  Patents  Company.  (Par.  C.) 

(2)  The  licensee  agrees  that  all  positive  motion  pictures 
manufactured  for  it  during  the  continuance  of  the  agreement 
shall  bo  manufactured  only  by  the  Patents  Company, 
licensees.  (Paragraph  8.)  This  paragraph  prevents  the 
General  Film  Company  from  purchasing,  leasing,  or  selling 
or  otherwise  dealing  in  positive  motion  pictures  except  those 

65498 — 12 - 5 


32 


ORIGINAL  PETITION. 


ORIGINAL  PETITION. 


manufactured  for  it  by  the  Patents  Company,  licensees,  with¬ 
out  the  consent  in  writing  of  the  licensor. 

(3)  The  Film  Company  agrees  to  pay  a  royalty  to  the  licen¬ 
sor  on  all  motion  pictures  purchased  by  it  at  the  maximum 
rate  of  one-lialf  cent  per  running  foot.  (Paragraph  9.)  This 
royalty  is  subject  to  reduction  if  the  amount  purchased  is  over 
4,000,000  running  feet.  If  it  runs  as  high  as  10,000,000 
feet,  the  royalty  is  reduced  to  3(4  mills  per  running  foot. 
(Paragraph  10.) 

(4)  The  Filin  Company  agrees  not  to  lease,  sell,  or  other¬ 
wise,  dispose  of  motion  pictures  to  anyone  purchasing,  using, 
dealing  in,  etc.,  motion  pictures  which  are  not  the  output  of 
the  General  Film  Company  or  of  other  licensees  of  the  Patents 
Company.  (Paragraph  12.) 

(5)  The  Film  Company  agrees  that  no  lease  of  positive 
motion  pictures  manufactured  for  or  purchased  by  the 
licensee  shall  be  made  in  the  United  States  except  upon 
certain  conditions  which  are  practically  the  same  as  those 
which  were  stated  in  the  rental  exchange  agreement  executed 
between  the  Patents  Company  and  the  rental  exchanges 
(supra,  pp.  19  to  22)  (paragraph  14),  to  wit: 

1.  The  lessee  (that  is,  the  exhibitor)  shall  not  dis¬ 
pose  of  the  pictures,  but  shall  only  have  the  right  to 
use  them  in  machines  licensed  by  the  Patents  Company 
under  patents  owned  or  thereafter  acquired  by  the 
Patents  Company. 

2.  The  lessee  shall  not  sublet  the  motion  pictures. 

3.  The  licensee,  that  is,  the  Film  Company,  shall 
on  the  first  day  of  every  month  withdraw  from  the 
market  an  amount  of  positive  motion  pictures  equal 
to  the  amount  of  such  motion  pictures  leased  by  it 
during  the  seventh  month  preceding  the  date  of  each 
such  withdrawal. 

4.  The  violation  of  any  of  these  conditions  entitles 
the  lessor  (General  Film  Company)  to  immediate 
possession  of  such  motion  pictures. 


(C)  The  Film  Company  agrees  that  it  will  dispose  of  motion 
pictures  manufactured  for  or  purchased  by  it  only  by  sale  for 
export  or  by  lease  to  motion-picture  exhibitors  in  the  United 
States  for  the  purpose  only  of  using  such  motion  pictures 
for  giving  exhibitions  in  exhibiting  machines  licensed  by  the 
Patents  Company  under  patents  named  or  thereafter  ac¬ 
quired.  (.paragraph,  15) ;  that  it  will  not  use  the  pictures  for 
the  purpose  of  giving  exhibitions  thereof  for  profit;  that  it 
will  not  knowingly  allow  motion  pictures  manufactured  for 
or  purchased  by  it  to  be  used  with  any  exhibiting  machines 
not  licensed  by  the  licensor,  under  patents  owned  by  it  or 
thereafter  acquired;  that  it  will  refrain,  from  supplying  mo¬ 
tion-  pictures  for  use-  with'  any  exhibiting  machines  the 
license  for  which  has  been  terminated  and- the  Film  Company 
notified,  thereof  by  the  licensor;  that  it  will  refrain  from,  sup¬ 
plying  motion  pictures,  to,  any  lessor  who  may  loan  or  sub¬ 
lease  such,  motion  pictures,  or  who  may  use  such  pictures  for 
giving-  exhibitions  thereof  in-  exhibiting  machines  not  licensed 
by  the.  licensor  or- the  license  for  which  has,  been  terminated, 
(paragraph  15). 

(7)  It  is  provided  that  the  agreement  may  be  renewed 
yearly,  until1  August  26j  1919,.  the  date  of  expiration  of  Patent 
707934;.  known  as-  the  Latham-  “Loop”  Patent.  (Para¬ 
graph  18.) 


The  agreement  last  described,  was  consented,  to 'by  eaoh  of 
the- 10  Patents  Company  licensees,  each,  of  whom  .affixed  its 
consent  thereto- in-  writing,-  such  consent  being  given  “withi 
the. understanding  that  said’General.  Film.  Company is  not  to, 
have, under,  said-limited  license’in  writing  any.  voting  rights’ or  ' 
royalty-sharing  rights  such  as  those  referred, to, in, said  agree¬ 
ment’ of 'the  undersigned,  with- said  Motion- Picture  ■  Patents 
Company.” 


34 


ORIGINAL  PETITION. 


Agreements  Between  the  General  Film  Com¬ 
pany  and  Patents  Company  Licensees. 

On  April  21,  1910,  with  the  same  unlawful  purposes  each 
of  the  10  Patents  Company  licensees  executed  an  agree¬ 
ment  with  the  General  Film  Company  to  supply  the  latter 
with  Him  to  be  leased  to  exhibitors.  These  agreements  are 
identical  with  each  other  except  as  to  the  paragraph  stating 
the  number  of  running  feet  of  film  which  the  General  Film 
Company  agrees  to  take. 

Defendants  by  agreement  with  each  other  executed  these 
agreements  as  another  means  for  accomplishing  their  unlaw¬ 
ful  purpose  to  monopolize  the  motion-picture  art  and  all 
interstate  and  foreign  business,  trade,  and  commerce  relating 
thereto.  Defendants  have  observed  and  are  now  observing 
said  agreements  and  all  the  terms  thereof,  and  interstate 
and  foreign  trade  and  commerce  in  articles  necessary  in  the 
motion-picture  art  are  being  restrained  thereby. 

A  copy  of  the  agreement  between  the  General  Film  Com¬ 
pany  and  Edison  Manufacturing  Company,  dated  April  21, 
1910,  is  attached  hereto  os  a  part  hereof,  marked  “Exhibit  8.” 
Said  agreement,  substantially  identical  with  nine  other 
agreements  concluded  the  same  day  with  the  other  Patents 
Company  licensees,  after  reciting  the  interlocking  restric¬ 
tions  contained  in  the  other  agreements,  provides  in  brief: 

(1)  The  manufacturer  (Edison  Company)  agrees  to  supply 

the  General  Film  Company  with  as  many  copies  of  each 
licensed  motion  picture  released  by  the  manufacturer  as  the 
General  Film  Company  may  require  for  the  conduct  of  its 
business  and  to  supply  them  at  the  same  leasing  prices,  terms, 
etc.,  as  it  leases  them  to  others.  (Paragraph  C.)  ’ 

(2)  The  General  Film  Company  agrees  that  it  will  lease 
from  the  manufacturer  motion  pictures  and  will  use  its  best 
efforts  to  introduce  them  and  extend  their  "use  by  motion 


ORIGINAL  PETITION.  35 

picture  exhibitors  using  the  licensed  projecting  machines. 
(Paragraph  7.) 

(3)  The  Film  Company  agrees  to  pay  the  manufacturer  a 
share  of  its  net  profits  at  the  end  of  each  year  during  the 
continuance  of  the  agreement,  after  it  has  paid  7  per  cent 
dividend  on  its  preferred  stock  and  12  per  cent  dividend  on 
the  common  stock.  The  manufacturer  is  to  have  such  a 
proportion  of  the  net  profits  remaining  after  the  deduction 
of  the  dividends  as  the  number  of  running  feet  of  pictures 
leased  by  the  manufacturer  to  the  Film  Company  bears  to 
the  total  amount  of  running  feet  leased  by  the  Film  Company 
from  all  the  Patents  Company  licensees  during  that  year. 
(Paragraph  8.) 

(4)  The  agreement  shall  continue  until  August  26,  1919, 
the  date  of  the  expiration  of  the  Latham  “loop”  patent,  No. 
707,934.  (Paragraph  12.) 

The  agreement  states  the  minimum  number  of  reels  which 
the  General  Film  Company  agrees  to  take,  as  well  as  the 
maximum  which  it  may  be  obliged  to  receive. 

XII. 

Conclusion. 

Throughout  the  period  of  time  mentioned  in  this  petition 
and  in  all  their  actions  described  herein,  defendants  havto 
been  actuated  by  the  purpose  to  monopolize  aU  branches  of 
interstate  and  'foreign  commerce  relating  to  the  motion- 
picture  art  and  to  exclude  all  others  therefrom. 

As  a  means  to  that  end,  they  organized  the  Motion  Picture 
Patents  Company,  a  New  Jersey  corporation.  To  it  they 
transferred  patents  competing  with  each  other  and  patents 
not  competing,  patents  valuable  and  patents  of  little  if 
any  worth. 

Not  satisfied  with  the  benefit  of  the  lawful  monopolies  nnd 
rights  belonging  to  them  under  the  several  letters  patent 
which  they  separately  nnd  independently  of  each  other 


01IIGINAI. 


37 


owned,  defendants  coveted  the  unlawful  power  which  would 
come  to  them  if  they  combined  all  patents  in  one  ownership; 
that  is,  if  they  created  and  thereafter,  possessed  and  main¬ 
tained  a  monopoly  of  all  patents  relating  to  the  motion- 
picture  art.  Defendants  formed  a  combination  of  patents 
as  one  of  the  methods  for  monopolizing  interstate  and 
foreign  commerce  pertaining  to  the  motion-picture  art. 

The.  Motion  Picture  Patents  Company  is  an  unlawful  in¬ 
strumentality  operated  and  maintained  by  defendants  solely 
for  the  purpose  of  carrying  into  effect  their  unlawful  intent. 
The  Patents  Company  has.  never  owned  any  property  except 
the  patents  transferred  to  it  by  defendants  and  which,  upon 
its  dissolution,  it  must  reassign,  without  consideration,  to  the 
several  defendants  who,  owned  and:  transferred,  them  to  the 
Patents,  Company.  (Supra,  pp,  u'  to.  16.),  Other  than  col¬ 
lecting  royalties  from  defendants  and.  distributing  such  roy¬ 
alties  among  them  in  the  manner  prescribed  by,  the  agree¬ 
ments,  its.  only  business  has  been  and  is  the  bringing  of 
lawsuits  under  the  patents,  which  it  acquired,  from  defend-, 
ants.  Acting  under  the  direction  of  the  other  defendants, 
in  order  to  compel  observance  by  rental  exchanges,  exhibit¬ 
ors,  and  all  other  persons  of  tiic  unlawful  restraints  embodied 
in  the  agreements,  and  in  order  to  harass  and  oppress  all 
persons  engaged  in  the  motion-picture  business  who  have 
not  obeyed;  its  mandates,  it  has.  brought  hundreds  of  suits  in 
the.  courts  of.  law  against  rental,  exchanges,  exhibitors,  and 
others.  Defendants  ,  have  used  their,  power,  great  by,  virtue 
of  .  their  combination,  unreasonably  and  oppressively  in  order, 
to  further  extepd,  tjieir,.  monopoly,  and,  exclude  others,  from 
the  motion-picture  art, 

Defendants  deviled  the,  interlocking  restrictions,  described; 
above,  applying  tq,  the.  use  of  their  several ,  machines,  applb 
ances,  and;  apparatus  as.  a  method,  to  pei-petunte.  their.,  mo¬ 
nopoly.  Not  one  of  these  restrictions  is  a  legal  and; reason¬ 


able  condition  attached  to  the  use  of  a  patented  machine 
by  the  owner  of  the  patent  acting  singly  and  in  good  faith 
in  order  to  protect  his  lawful  monopoly,  but  each  condition 
is  one  and  a  part  of  a  combination  of  conditions  and  restric¬ 
tions  devised  by  a  combination  of  all  the  defendants,  all  the 
conditions  applying  collectively  to  and  interlocking  the  use 
of  all  the  machines.  These  restrictions  and  unlawful 
restraints  dovetail  into  each  other  in  such  a  manner  that 
the  manufacturer,  the  rental  exchange,  and  the  exhibitor 
must  use  all  or  none  of  the  machines  covered  by  the  different 
patents.  He  can  use  no  others. 

With  the  object  of  concealing  their  true  purposes  and  the 
the  real  character  of  the  combination,  defendants  devised, 
adopted,  and  enforced  the  so-called  license  agreements, 
attempting  to  give  to  their  actions  a  lawful  appearance  and 
to  the  combination  a  legal  form.  In  the  agreements  they 
embodied  unlawful  restraints  upon  commerce,  styled  by 
defendants  qualifications  upon  the  use  of  patented  machines, 
but  in  fact  unreasonable,  undue,  and  oppressive  restraints 
arbitrarily  imposed  by  them  upon  commerce  in  articles  not 
patented. 

As  previously  pointed  out,  by  far  the  largest  and  most 
important  part  of  the  commerce  relating  to  the  motion- 
picture  art  is  the  commerce  in  positive  films,  of  which  mil¬ 
lions  of  running  feet  are  distributed  each  week  throughout 
the  United  States  and  subsequently  displayed  by  thousands 
of  exhibitors  throughout  the  country.  The  combination ^of 
defendants  was  devised  to  restrain  that  commerce.  Such 
positive  films"  are  not  'patented.  Reissued  Letters  Patent 
13192  (attached  hereto  as  a  part  hereof,  marked  “Exhibit 
9”),  made  by  defendants- the  basic  patent  of  their  combina¬ 
tion,  relates  only  to  the  negative  film.  The  positive  film, 
(which  is  sometimes  copyrighted  by  the  producer),  is  the 
product  of  the  negative,  being  developed  and  printed  from 


OHIGINAL  PETITION. 


the  latter.  The  dominion  of  the  patentee  does  not  include 
control  over  the  product  of  the  patented  article  unless  new 
in  a  patentable  sense.  Therefore,  whether  or  not  Reissued 
Letters  Patent  12192  is  a  valid  patent,  as  to  which  grave 
doubt  must  exist  in  view  of  the  decision  of  the  Circuit  Court 
of  Appeals  of  the  Second  Circuit,  March  10,  1902,  holding 
invalid  the  patent  of  which  12192  is  in  part  a  reissue  and 
stating  that  the  owner  of  the  prior  patent  was  not  the 
inventor  of  the  film  (114  Fed.,  934),  in  any  event,  defend¬ 
ants  have  no  lawful  right  under  the  patent  laws  to  destroy 
competition  in  commerce  and  restrain  commerce  in  the 

(unpatented  positive  film. 

Defendants,  by  means  of  the  license  agreements,  have  pre¬ 
vented  and  are  preventing  the  importation  of  foreign  films 
except  to  a  limited  extent  by  defendant  Kleine  and  corpora¬ 
tion  defendant,  Melies  Manufacturing  Company,  who  are 
allowed  to  import  only  a  small  quantity  weekly,  and  thereby 
defendants  have  deprived  and  are  depriving  the  public  of 
the  advantages  which  would  arise  from  competition  with 
foreign  films. 

Defendants  created  the  General  Film  Company  as  a  means 
for  monopolizing  the  commerce  of  the  rental  exchanges  in  the 
manner  hereinabove  pointed  out,  and  they  are  now  maintain¬ 
ing  and  operating  it  with  the  same  unlawful  intent. 

Between  70  and  80  per  cent  of  the  motion-picture  film 
annually  manufactured  and  sold  in  the  United  States  is  the 
product  of  the  ten  Patents  Company  licensees.  This  film 
is  shipped  by  the  manufacturers  to  45  branches  of  the  Gen¬ 
eral  Film  Company  scattered  over  the  United  States  and 
distributed  by  the  latter  to  approximately  7,000  exhibitors. 
Independent  manufacturers  of  film  may  not  distribute  their 
product  through  the  General  Film  Company,  which  is  the  sole 
distributing  agency  of  the  Patents  Company  licensees;  exhib¬ 
itors  obtaining  supplies  of  film  from  the  General  Film  Com¬ 
pany  are  not  allowed  to  display  the  films  of  the  independent 


OHIGINAL  PETITION.  39 

manufacturers.  Independent  exchanges  are  cut  off  from 
handling  the  film  of  the  ten  Patents  Company  licensees  and 
independent  exhibitors  and  theater  owners  can  not  obtain 
for  exhibition  in  their  theaters  the  pictures  of  the  Patents 
Company  licensees. 

In  conclusion,  all  the  unlawful  restraints  and  conditions 
contained  in  the  license  agreements  and  described  in  this 
petition  defendants  to-day  are  observing  and  enforcing,  and 
will  continue  to  observe  and  enforce  unless  restrained  by 
this  honorable  court. 

XIII. 

Jurisdiction. 

Petitioner  avers  that  the  combination  and  conspiracy  to 
restrain  interstate  and  foreign  commerce  and  motion-picture 
films,  machines,  and  apparatus  relating  to  the  motion-picture 
art  still  exists;  that  the  defendants  are  carrying  out  and 
engaging  in  the  some  within  the  State  of  Pennsylvania 
within  the  Eastern  District  of  said  State,  and  that  many  of 
the  things  herein  complained  of  have  been  committed  in 
whole  and  others  in  part  within  the  said  State  and  district 
and  are  now  being  committed  therein;  that  the  defendant 
Lubin  Manufacturing  Company  is  located  at  and  doing 
business  within  said  State  and  district 

XIV. 

Prayer. 

Wherefore  petitioner  prays : 

1.  That  the  combination  hereinbefore  described,  in  and  of 
itself,  as  well  ns  each  and  all  of  the  elements  composing  it,, 
whether  corporate  or  individual,  whether  considered  collec-. 
tively  or  separately,  be  decreed  to  be  in  restraint  of  interstate  , 
and  foreign  trade-  and.  an  attempt  to  monopolize  and.  a 
monopolization  thereof  within  the  first  and  second  sections 
of  the  act  of  Congress  of  July  2,  1890,  entitled  “An  act  to 


ORIGINAL 


ORIGINAL  PETITION. 


protect  trade  and  commerce  against  unlawful  restraints  and 
monopolies.” 

2.  That  the  court  adjudge  the  Motion  Picture  Patents 
Company  and  the  General  Film  Company,  severally  and 
respectively,  to  he  a  combination  in  restraint  of  interstate 
and  foreign  trade  and  commerce  in  motion-picture  films  and 
other  articles  relating  to  the  motion-picture  art,  a  restraint, 
and  an  attempt  to  monopolize  and  a  monopolization  thereof, 
and  that  the  court  direct  a  dissolution  of  each  of  said  com¬ 
binations. 

3.  That  the  court  adjudge  the  Motion  Picture  Patents 
Company  and  the  General  Film  Company,  severally  and 
respectively,  to  be  an  unlawful  instrumentality  operated  and 
maintained  by  defendants  solely  for  the  purpose  of  carrying 
into  effect  the  illegal  purposes  of  said  contracts,  combina¬ 
tions,  and  conspiracies  in  restraint  of  interstate  trade 
and  commerce  and  of  said  attempts  to  monopolize,  and 
monopolies. 

4.  That  the  court  adjudge  that  the  various  so-called 
license  agreements  described  in  the  petition,  entered  into  be¬ 
tween  the  Motion  Picture  Patents  Company  and  the  10  Patents 
Company  licensees,  and  the  so-called  license  agreements 
between  the  Motion  Picture  Patents  Company  and  the  General 
Film  Company,  and  the  agreements  between  the  General  Film 
Company  and  the  10  Patents  Company  licensees,  and  all  other 
license  agreements  referred  to  and  described  in  the  petition, 
were  devised,  planned,  entered  into,  and  are  now  being  observed 
and  enforced  solely  for  the  purpose  of  enabling  the  defendants 
to  carry  into  effect  the  objects  and  purposes  of  said  unlawful 
combination  and  conspiracy  in  restraint  of  said  interstate  and 
foreign  trade  and  commerce;  that  each  of  said  agreements 
be  declared  illegal,  and  be  cancelled,  and  that,  the  dt.fon.i- 
ants,  and  all  and  each  of  them,  and  their  oflmers,  agents, 
servants,  and  employees,  be  enjoined  and  prohibited  from 


doing  anything  in  pursuance  or  in  furtherance  of  said  agree¬ 
ments,  and  from  enforcing  in  any  manner  said  agreements, 
or  any  of  the  terms  thereof,  in  interstate  and  foreign 
commerce. 

5.  That  the  court  by  way  of  an  injunction  restrain  the 
movement  of  the  products  of  the  10  Patents  Company 
licensees  and  of  the  General  Film  Company  in  the  channels 
of  interstate  commerce  until  the  decree  of  the  court  respecting 
the  Motion  Picture  Patents  Company,  the  General  Film  Com¬ 
pany,  and  the  said  so-called  license  agreements  has  been 
carried  into  effect  by  defendants  and  said  Patents  Company 
and  General  Film  Company  dissolved  and  said  agreements 
canceled. 

6.  That  the  court  adjudge  that  the  patents  named  in  the 
so-called  license  agreements  referred  to  and  described  in  the 
petition,  now  claimed  to  be  held  and  owned  by  defendant 
Motion  Picture  Patents  Company,  •  were  acquired,  and  are 
now  held  by  said  defendant  by  virtue  of  such  combination 
and  conspiracy  in  restraint  of  trade  and  commerce  among 
the  several  States  and  with  foreign  nations,  and  solely  to 
effectuate  the  unlawful  objects  and  purposes  of  the  same, 
and  that  the  said  Motion  Picture  Patents  Company,  its  offi¬ 
cers,  directors,  and  agents,  be  enjoined  .'from  exercising  or 
attempting  to  exercise  any  control,  direction,  supervision, 
or  influence  whatever  over  the  interstate  or  foreign  commerce 
of  the  other  defendants  by  virtue  of  said  company  holding 
said  patents  or  otherwise. 

7.  That  the  defendants  and  all  and  each  of  them  be 
enjoined,  and  prohibited  from  entering  into  or  continuing 
any  similar  combination  or  conspiracy,  and  from  agreeing, 
combining,  conspiring,  and  acting  together  to  prevent  each 
and  any  of  them  from  carrying  on  interstate  and  foreign 
trade  and  commerce  in  motion  picture  films  and  other  arti¬ 
cles  relating  to  the  motion  picture  art  in  competition  with  the 


42 


ORIGINAL  PETITION. 


- y- 


8.  That  the  United  States  may  have  such  other  and  fur¬ 
ther  relief  as  the  nature  of  the  case  may  require  and  the 
court  may  deem  proper  in  the  premises. 

To  the  end,  therefore,  that  the  United  States  of  America 
may  obtain  the  relief  to  which  it  is  justly  entitled  in  the 
premises,  may  it  please  your  honors  to  grant  unto  it  writs 
of  subpoena  directed  to  the  said  defendants:  Motion  Picture 
Patents  Company,  General  Film  Company,  the  Biograph 
Company,  Thomas  A.  Edison  (Inc.),  Essanay  Film  Manu¬ 
facturing  Company,  the  Kalem  Company  (Inc.),  George 
Kleine,  Lubin  Manufacturing  Company,  Melies  Manufacturing 
Company,  Patlid  Frfcres,  Selig  Polyscope  Company,  Vitagraph 
Company  of  America,  Armat  Moving  Picture  Company, 
Frank  L.  Dyer,  Henry  N.  Marvin,  J.  J.  Kennedy,  William 
Pelzer,  Samuel  Bong,  J.  A.  Berst,  S'icgmund  Lubin,  Gaston 
Melies,  Albert  E.  Smith,  George  K.  Spoor,  W.  N.  Selig,  and 
each  and  every  one  of  them,  commanding  them  and  each 
of  them' to  appear  herein  and  answer,  but  not  under  oath 
(answer  under  oath  being  hereby  expressly  waived),  the 
allegations  contained  in  the  foregoing  petition  and  abide  by 
and  perform  such  orders  and  decree  as  the  court  may  make 
in  the  premises. 

John  C.  Swartley, 
United  States  Attorney. 

George  W.  Wickersham, 

Attorney  General. 

James  A.  fowler, 

Assistant  to  the  Attorney  General. 

Edwin  P.  Grosvenor, 

Special  Assistant  to  the  Attorney  General. 


Exhibit  1. 

Charter  of  motion  Picture  Patents  Company. 

This  is  to  certify  that  we,  the  undersigned,  do  hereby 
associate  ourselves  into  a  corporation  under  and  by  virtue 
of  the  provisions  of  an  act  of  the  legislature  of  tiie  State  of 
New  Jersey  entitled  “An  act  concerning  corporations  (re¬ 
vision  of  189G),”  and  the  supplements  thereto  and  acts 
amendatory  thereof,  for  the  purposes  hereinafter  mentioned, 
hereby  claiming  for  ourselves  all  the  rights  and  privileges 
now  or  hereafter  granted  by  the  laws  of  the  State  of  New 
Jersey  to  corporations,  and  to  that  end  we  do  by  this  our 
certificate  set  forth : 

First.  The  name  which  we  have  assumed  to  designate 
such  corporation  and  to  be  used  in  its  business  and  dealings 
is  “Motion  Picture  Patents  Company.” 

Second.  The  location  of  the  principal  office  of  the  corpora¬ 
tion  in  this  State  is  at  No.  15  Exchange  Place,  Jersey  City, 
in  the  county  of  Hudson.  The  name  of  the  agent  therein 
and  in  charge  thereof  upon  whom  process  against  the  cor¬ 
poration  may  be  served  is  Charles  L.  Carrick. 

Third.  The  objects  for  which  this  corporation  is  formed 
are  to  acquire  by  purchase,  lease,  pa/ment  of  royalties,  or 
otherwise,  letters  patent,  inventions  and  improvements  in 
materials,  processes,  and  apparatus  relating  to  the  produc¬ 
tion  of  negatives  and  positives  for  motion  pictures,  and  also 
relating  to  the  photographing,  developing,  reproducing, 
projecting,  and  exhibiting  of  scenes  and  objects  at  rest  and 
in  motion;  to  mortgage,  sell,  lease,  dispose  of  by  agreement 
or  otherwise,  such  letters  patent,  licenses  under  letters 
patent,  and  improvements,  and  to  license  others  to  use  the 
inventions  covered  by  the  said  letters  patent  and  to  use  such 
improvements;  to  purchase,  hold,  sell,  and  convej*such  real 
and  personal  property  as  shall  be  lawful  and  adapted  to  the 
requirements  of  the  business  of  the  company. 


44  ORIGINAL  PETITION,  EXHIBIT  1. 

This  corporation  shall  also  have  power  to  conduct  its  busi¬ 
ness  in  all  its  branches  and  to  have  one  or  more  offices  and  to 
hold,  lease,  or  convey  real  or  personal  property  outside  of  the 
State  of  New  Jersey  and  in  all  other  States  and  in  all  foreign 
countries  to  which  the  business  of  the  company  may  be  here¬ 
after  extended,  and  to  do  any  acts  or  things  designed  to  pro¬ 
tect,  improve,  or  enhance  the  value  of  any  of  such  patents 
and  of  other  property  of  the  corporation. 

Fourth. — The  amount  of  capital  stock  of  the  company  m 
one  hundred  thousand  dollars  (§100,000)  divided  into  one 
thousand  (1,000)  shares  of  the  par  value  of  one  hundred  dol¬ 
lars  (§100)  each.  The  amount  of  capital  stock  with  which 
the  company  shall  commence  business  is  two  thousand  dol¬ 
lars  (§2,000). 

Fifth.— The  names  and  post-office  addresses  of  the  incor¬ 
porators  and  the  number  of  shares  subscribed  for  by  each  are 
as  follows : 

Hugh  H.  Harrison,  Brook  Haven, "n'-'y . 


William  H-  Lane,  4  Boulevard,  Westfield,'  N.  J. . . .' . . . " .  .  . .  5 

Sixth.— The  existence  of  this  corporation  shall  begin  on 
the  day  of  the  filing  of  these  articles  of  incorporation  in  the 
office  of  the  secretary  ,  of  state  of  New  Jersey  and  shall  con¬ 
tinue  for  a  period  of  fifty  (50)  years  from  that  date. 

In  witness  whereof  we  have  hereunto  set  our  hands  and 
seals  this  8th  day  of  September,  nineteen  hundred  and  eight. 

Hugh  H.  Haiuiison.  [l.  r.] 
Geo.  J.  Murray.  [l.  s.] 
William  H.  Lane.  [l.  s.] 

In  presence  of  Guernsey  R.  Jewett  as  to  Hugh  H.  Harrison 
Geo.  J.  Murray,  and  William  H.  Lane. 

“Filed  and  recorded  September  9, 1908. 

“S.  D.  Dickinson, 
“Secretary  of  State.” 


Exhibit  2. 

Preliminary  Agreement  lor  Assignment  of 
Patents  Between  motion  Picture  Patents 
Company  and  Edison  Manufacturing  Com¬ 
pany,  December  18,  1908. 

Agreement  made  this  18th  day  of  December,  1908,  by 
and  between  the  Motion  Picture  Patents  Company,  a  cor¬ 
poration  organized  and  existing  under  the  laws  of  the  State 
of  New  Jersey,  and  having  an  office  at  Jersey  City  in  said 
State  (hereinafter  referred  to  as  the  “Patents  Company”), 
party  of  the  first  part,  and  the  Edison  Manufacturing  Com¬ 
pany,  a  corporation  organized  and  existing  under  the  laws 
of  the  State  of  New  Jersey,  and  having  an  office  at  Orange 
in  said  State  (hereinafter  referred  to  as  the  “Edison  Com¬ 
pany”),  party  of  the  second  part: 

(1)  Whereas  the  Edison  Company  represents  that  it  is 
the  owner  of  all  the  right,  title,  and  interest  in  and  to  reissued 
United  States  Letters  Patent  No.  12037,  dated  September 
30,  1902,  and  reissued  United  States  Letters  Patent  No. 
12192,  dated  January  12,  1904,  and  that  there  are  no  out¬ 
standing  licenses  under  the  said  letters  patent  other  than 
those  hereinafter  referred  to,  and 

(2)  Whereas  the  Edison  Company  represents  that  it  has 
heretofore  granted  licenses  in  writing  to  manufacture  and 
use  the  inventions  described  and  claimed  in  said  reissued 
Letters  Patent  No.  12037,  and  to  manufacture  and  sell  the 
invention  described  and  claimed  in  the  said  reissued  Letters 
Patent  No.  12192,  to  the  Vitngraph  Company  of  America, 
of  New  York;  Slegmund  Lubin,  of  Philadelphia;  the  Selig 
Polyscope  Company  of  Chicago;  the  Essanay  Company 
of  Chicago;  the  Kalem  Company  of  New  York;  and  the 
George  Melics  Company  of  Chicago,  all  dated  January  31, 
1908,  and  to  Patlid  Fibres  of  New  York,  dated  May  20,  1908, 
to  go  into  effect  June  20,  1908  (the  licensees  under  snid 
license  agreements  being  hereinafter  referred  to  as  “Edison 
Licensees”),  and  the  Edison  Company  further  represents 


4G  ORIGINAL  PETITION,  EXHIBIT  2. 

that  the  said  Edison  Licensees  are  willing  to  suspend  the 
operation  of  the  said  licenses;  and 

(3)  Whereas,  the  Edison  Company  represents  that  it 
has  heretofore  entered  into  two  agreements  in  writing, 
dated  May  20,  1908,  with  the  Eastman  Kodak  Company,  a 
corporation  of  New  York  (hereinafter  referred  to  ns  the 
“Eastman  Company”),  granting  the  right  to  the  said  East¬ 
man  Company  to  supply  “licensed  film”  to  the  Edison 
Licensees,  and  that  the  Eastman  Company  is  willing  to 
terminate  the  said  agreements;  and 

(4)  Whereas,  the  Patents  Company  represents  that  it 
has  an  authorized  capitalization  of  one  hundred  thousand 
dollars  (§100,000),  of  which  twenty  (20)  shares  of  a  par 
value  of  §2,000  are  outstanding,  and  whereas,  the  Edison 
Company  desires  to  acquire  fifty  thousand  dollars  (§50,000) 
of  the  capital  stock  of  the  Patents  Company,  and  is  willing 
to  assign  to  the  Patents  Company  all  of  its  right,  title, 
and  interest  in  and  to  the  said  reissued  United  States  letters 
patent  and  is  willing  to  suspend  the  operation  of  the  said 
licenses  granted  thereunder,  and  to  terminate  the  said 
agreements  with  the  Eastman  Company,  in  consideration  of 
the  payment  to  the  Edison  Company  of  forty-nine  thousand 
dollars  (§49,000)  of  the  capital  stock  of  the  Patents  Com¬ 
pany,  and  one  thousand  dollars  (§1,000)  in  cash,  provided 
that  for  the  said  one  thousand  dollars  in  cash,  the  Patents 
Company  shall  have  assigned  to  the  Edison  Company  ten 
(10)  shares  of  the  said  capital  stock  at  a  par  value  of  one 
thousand  dollars  (§1,000) ;  and 

(5)  Whereas,  the  board  of  directors  of  the  Patents  Com¬ 
pany  has  ascertained,  adjudged,  and  declared  that  the  said 
right,  title,  and  interest  in  the  said  reissued  letters  patent 
free  from  the  operation  of  the  said  licenses  and  agreements, 
are  of  the  fair  value  of  fifty  thousand  dollars  (§50,000)  and 
that  the  acquisition  thereof  is  necessary  for  the  business  of 
the  Patents  Company  and  to  carry  out  its  contemplated 
objects,;  and 

(G)  Whereas,  the  Patents  Company  represents  that  it  lias 
acquired  or  will  acquire  from  the  Vitagrapli  Company  of 
America,  of  New  York,  all  the  right,  title,  and  interest  in  and 


ORIGINAL  PETITION,  DXniBIT  2.  47 

to  United  States  Letters  Patent  Nos.  673329,  744251,  770937, 
771280,  785205,  and  785237  (hereinafter  referred  to  as  the 
“Vitagrapli  patents”)  all  of  which  relate  to  motion  picture 
projecting  machines,  and  has  agreed  to  pay  to  the  said  Vita- 
graph  Company  of  America  a  royalty  of  one  dollar  (§1)  on 
each  projecting  machine  embodying  one  or  more  of  the  inven¬ 
tions  described  and  claimed  in  the  said  Vitagrapli  patents 
made  and  sold  under  any  licenses  for  the  manufacture  and 
sale  of  such  projecting  machines,  granted  by  the  Patents 
Company  (said  royalties  being  hereinafter  referred  to  ns 
“Vitagraph  royalties”)  and  also  further  represents  that  it 
has  acquired  or  will  acquire  from  the  American  Mutoscopo 
and  Biograph  Company,  a  corporation  of  New  Jersey  (here¬ 
inafter  referred  to  as  the  “Biograph  Company”),  and  the 
Armat  Moving  Picture  Company,  a  corporation  of  West 
Virginia  (hereinafter  referred  to  as  the  “Armat  Company”), 
all  the  right,  title,  and  interest  in  and  to  United  States  Let¬ 
ters  Patent  Nos.  578185,  580749,  58G953,  58891G,  629063, 
673992,  707934,  and  722382,  nil  of  which  relate  to  motion 
picture  projecting  machines  or  cameras;  and 

(7)  Whereas,  the  Patents  Company  represents  that  it  con¬ 
templates  deriving  royalties  under  patents  covering  pro¬ 
jecting  machines  owned  by  the  Patents  Company  from 
manufacturers  of  projecting  machines  (hereinafter  referred 
to  as  “machine  royalties”) ;  royalties  from  exhibitors  for  the 
use  of  projecting  machines  licensed  under  any  or  all  of  thq 
patents  covering  projecting  machines  owned  by  the  Patents 
Company  (hereinafter  referred  to  os  “exhibitors'  royal¬ 
ties”),  and  royalties  derived  from  manufacturers  and  import¬ 
ers  of  motion  pictures  under  said  reissued  United  States  Let¬ 
ters  Patent  Nos.  12037  and  12192  (hereinafter  referred  to 
as  “dim  royalties”) ;  and 

(8)  Wherens,  the  Patents  Company  has  agreed  to  pay  to 
the  manufacturers  and  importers  of  licensed  motion  pictures, 
except  the  Biograpli  Company  and  the  Edison  Company,  24 
per  cent  (24%)  of  the  gross  exhibitors  royalties; 

Now;  therefore,  this  indenture  witnesseth  that: 

(9)  The  Edison  Company,  in  and  by  these  presents,  does 
agree  to  assign,  transfer,  and  set  over  unto  the  Patents 


48  ORIGINAL  PETITION,  EXHIBIT  2. 


ORIGINAL  PETITION,  EXHIBIT  2.  49 


Company  and  its  successors  in  business,  tbe  entire  riglit, 
title,  and  interest  in  and  to  tlie  said  reissued  United  States 
Letters  Patent,  Nos.  1203T  and  12192,  and  tlie  inventions 
described  and  claimed  therein,  and  tlie  right  to  sue  for  and 
recover  damages  and  profits  for  past  infringement  of  the  said 
reissued  letters  patent  and  of  each  of  them,  and  to  enter  into 
agreements  in  writing  with  tbe  said  Edison  Licensees  sus¬ 
pending  the  operation  of  the  licenses  granted  by  the  Edison 
Company  under  tlie  said  reissued  United  States  Letters 
Patent  to  the  said  Edison  Licensees,  so  long  as  the  said 
reissued  letters  patent  are  owned  by  the  Patents  Company, 
and  to  enter  into  agreements  in  writing  with  the  Eastman 
Company  terminating  the  agreements  in  writing  referred  to 
in  paragraph  3  hereof,  so  long  as  the  said  reissued  letters 
patent  are  owned  by  the  Patents  Company. 

(10)  The  Patents  Company  hereby  covenants  and  agrees, 
in  consideration  of  the  said  agreement  of  the  Edison  Com¬ 
pany,  and  upon  the  assignment  of  the  said  reissued  letters 
patent  to  the  Patents  Company,  and  upon  the  making  of  the 
said  agreements  in  writing  by  and  between  the  Edison  Com¬ 
pany  and'  the  Edison  Licensees  and  tne  Eastman  Company, 
to  issue  to  the  Edison  Company  certificates  of  stock  of  the 
Patents  Company  to  the  aggregate  amount  of  four  hundred 
and  ninety  (490)  shares,  of  a  par  value  of  forty-nine  thousand 
dollars  ($49,000),  and  to  pay  to  the  Edison  Company  one 
:  thousand  dollars  ($1,000)  in  cash,  and  the  Patents  Company 
further  covenants  and  agrees  that  at  the  same  time  there 
shall  be  assigned  to  the  Edison  Company  for  the  said  $1,000 
in  cash  ten  (10)  shares  of  the  capital  stock  of  the  Patents 
Company  at  a  par  value  of  one  thousand  dollars  ($1,000). 

(11)  The  Edison  Company  covenants  and  agrees  that  it 
has  canceled  or  will  cancel  any  licenses,  shop  rights,  or 
other  rights  which  may  have  been  heretofore  granted  under 
either  or  both  of  tlie  said  reissued  United  States  letters 
patent  to  any  person,  firm,  or  corporation  other  than  the 
Edison  Licensees,  and  the  Edison  Company  further  covenants 
and  agrees  that  it  will  save  harmless  in  all  respects  the 
Patents  Company  from  any  claim  under  any  agreement,  con¬ 
tract,  or  other  obligation  which  the  Edison  Company  or  its 


a  title  may  have  entered  into  or  assumed  with 
any  person,  firm,  or  corporation  concerning  or  involving  any 
licenses,  shop  right,  or  other  right  under  any  or  all  of  the 
said  reissued  letters  patent. 

(12)  The  Patents  Company  further  covenants  and  agrees 
that  it  will  keep  in  separate  accounts  the  incomes  from  film 
royalties,  from  machine  royalties,  and  from  exhibitors’  royal¬ 
ties,  and  that  the  general  and' contingent  expense  of  the 
Patents  Company  (which  shall  not  include  any  expense  in¬ 
curred  in  any  litigation)  shall  not  exceed  fifty  thousand 
dollars  ($50,000)  in  any  one  year.  The  Patents  Company 
further  covenants,  and  agrees  that  on  June  20,  1909,  and  at 
the  end  of  each  and  every  year  thereafter  until  the  expira¬ 
tion  of  the  said  reissued  United  States  -Letters  Patent  Nos. 
12037,  and  12192,  and  on  August  14,  1914,  the  date  of  ex¬ 
piration  of  the  said  reissued  letters  patent,  it  will  make 
up  the  accounts  of  and  distribute  the  said  royalties  for 
the  preceding  year  or  portion  thereof,  as  the  case  may  be, 
in  the  following  manner : 

First.  From  the  machine  royalties  shall  be  deducted  the  1 
Vitagrapli  royalties  for  payment  to  the  Vitngrapli  Company  1 
of  America,  and  from  the  exhibitors’  royalties  shall  be  de-  1 

ducted  24  per  cent  (24%)  thereof  for  payment  to  the  innnu- _ J 

facturers  and  importers  of  licensed  motion  pictures. 

Second.  From  the  film  royalties  and  the  remainders  of  the 
machine  royalties  and  of  the  exhibitors’  royalties  shall  be  de¬ 
ducted  the  general  and  contingent  expense  for  the  preceding 
year  or  portion  thereof,  ns  the  case  may  be,  together  with  any 
expense  for  litigation  which  may  have  .been  incurred  by  the 
Patents  Company,  in  shares  proportioned  according  to  the 
ratio  which  each  of  said  sums  bears  to  tlie  gross  income  of 
the  Patents  Company  for  that  year  or  portion  thereof,  the 
remainders  of  such  sums  after  the  said  deductions  are  made 
being  hereinafter  referred  to  ns  "net  film  royalties,”  “net 
machine  royalties,”  and  “net  exhibitors’  royalties,”  re¬ 
spectively. 

Third.,  The  net  film  royalties,  the  net  machine  royalties, 
and  the  net  exhibitors’  royalties  shall  be  paid  to  the  trustee 
:provided  for  in  paragraph  14  of  this  agreement  as  a  dividend 


50  ORIGINAL  PETITION,  EXHIBIT  2. 

upon  the  capital  stock  of  the  Patents  Company  and  the  said 
trustee  shall  be  instructed  to  divide  and  pay  the  said  divi 

dend  in  the  following  manner: 

(а)  To  the  Edison  Company  shall  be  assigned  and  p.i 

an  amount  equal  to  the  net  film  royalties.  _ 

(б)  The  remainder  of  the  dividend,  up  to  an  amount 
equal  to  the  net  film  royalties,  shall  be  assigned  and  paid  to 
the  Biograph  Company  and  the  Armat  Company,  respec¬ 
tively  in  the  proportion  of  two-thirds  (2/3)  to  the  Biograph 
Company  and  one-third  (1/3)  to  the  Armat  Company. 

(c)  If  any  balance  remains  after  the  foregoing  payment  , 
it  shall  be  divided  and  paid  to  the  Edison  Company,  the 
Biograph  Company,  and  the  Armat  Company,  m  the  pro¬ 
portion  of  one-half  (%)  to  the  Edison  Company,  on^Biml 
(1/3)  to  the  Biograph  Company,  and  one-sixth  (1/6)  to  the 
Armat  Company. 

(13)  The  Patents  Company  further  covenants  and  agrees 
that,  on  August  31,  1915  (one  year  after  1 tbe  date  of  the 
expiration  of  reissued  Letters  Patent  Nos.  12037  and  12192), 
and  at  the  end  of  each  and  every  year  thereafter,  it  will  pay 
to  the  trustee  provided  for  in  paragraph  14  of  this  agreement 
all  of  its  net  profits  for  the  preceding  year,  which  consists 
of  the  net  machine  royalties,  the  net  exhibitors’  royalties  and 
the  net  sum  of  any  royalties  which  the  Patents  Company 
may  collect  in  lieu  of  the  present  film  royalties  (such  net 
amounts  being  determined  as  provided  for  in  paragraph  12 
hereof)  as  a  dividend  upon  the  capital  stock  of  the  Patents 
Company,  and  will  instruct  the  trustee  to  divide  the  said 
dividend  and  pay  to  the  Edison  Company  therefrom  an 
amount  equal  to  one-half  (y2)  of  such  dividend. 

/(U)  The  Edison  Company  further  covenants,  and  agrees 
7  not  to  pledge,  sell  or  otherwise  dispose  of  its  capital  stock  in 
the  Patents  Company,  except  the  minimum  number  of  shares 
sufficient  to  qualify  one-half  of  the  total  number  of  directors 
which  the  Patents  Company  may  have,  without  the  consent 
IC'^of  the  Biograph  Compnny  and  the  Armat  Company,  and 
VT  '  the  Edison  Company  further  agrees  to  deposit  its  certificates 
of  stock  in  the  Patents  Company,  except  such  as  represent 
the  said  qualifying  shares  for  directors,  with  a  responsible 


ORIGINAL  PETITION,  EXHIBIT  2.  51 

trust  company  named  by  the  Patents  Company,  as  trustee, 
and  to  instruct  the  said  trustee  not  to  release,  transfer,  or  fts 
return  the  said  certificates  so  deposited,  without  the  consent  j 
of  the  Biograph  Company  and  the  Armat  Company, - - - - 

(15)  It  is  further  mutually  covenanted  and  agreed  by  and 
between  the  Patents  Company  and  the  Edison  Company 
that  this  agreement  shall  take  effect  on  the  date  hereof,  and 
that  if  during  the  life  of  this  agreement  either  party  should 
knowingly  or  through  gross  neglect  or  carelessness  be  guilty 
of  a  breach,  violation,  or  nonperformance  of  its  covenants, 
conditions,  and  stipulations,  resulting  in  substantial  injury 
to  the  other  party,  and  should  for  the  period  of  thirty  days 
after  notice  thereof  from  the  other  party,  persist  therein  or 
fail  to  correct,  repair,  or  remedy  the  same,  then  and  in  such' 
case  the  party  aggrieved  may  terminate  this  agreement  by 
giving  thirty  days’  notice  in  writing  to  the  guilty  party  of 
its  intention  so  to  do,  and  it  is  further  mutually  covenanted 
and  agreed  that  this  agreement  may  also  be  terminated  by 
either  of  the  parties  hereto  in  case  that  the  Patents  Company 
should  become  bankrupt,  cease  doing  business,  or  should  be 
dissolved  voluntarily  or  otherwise,  or  its  charter  should  be 
repealed.  It  is  also  further  mutually  covenanted  and  agreed 
that,  upon  the  termination  of  this  agreement  for  any  of  the 
foregoing  causes,  or  any  other  cause,  all  of  the  right,  title, 
and  interest  in  and  to  the  said  reissued  United  States  Letters 
Patent  Nos.  12037  and  12192  shall  be  reassigned  by  the 
Patents  Company  to  the  Edison  Company  for  and  in  con¬ 
sideration  of  the  sum  of  one  dollar  ($1). 

In  witness  whereof,  the  parties  hereto  have  caused  this 
agreement  to  be  executed  by  their  officers  duly  authorised 
to  perform  these  acts,  the  day  and  year  first  above  written. 

[seal.]  Motion  Picture  Patents  Company, 

By  H.  H.  Harrison,  President. 

Attest: 

Geo.  J.  Murray,  Secretary . 

[seal.]  Edison' Manufacturing  Company, 

•By  Prank  L.  Dyer,  Pice  President. 

Attest: 

A;  Westie,  Secretary. 


ORIGINAL  PETITION,  EXHIBIT  3. 


53 


Exhibit  3. 

license  Agreement  Under  the  Camera  and 
Film  Patents  Between  Motion  Picture  Pat¬ 
ents  Company  and  Biograph  Company, 
December  18, 1908. 

(a)  This  agreement,  made  this  18th  day  of  December, 
1908,  by  and  between  Motion  Picture  Patents  Company, 
a  corporation  organized  and  existing  under  the  laws  of  the 
State  of  New  Jersey,  and  having  an  office  at  Jersey  City, 
in  said  State,  party  of  the  first  part  (hereinafter  referred  to 
as  the  Licensor),  and  American  Mutoscope  and  Biograpli 
Company,  a  corporation  organized  and  existing  under  the 
laws  of  the  State  of  New  Jersey,  and  having  an  office  at 
New  York  City,  party  of  the  second  part  (hereinafter  referred 
to  as  the  Licensee),  witnesseth: 

(b)  Whereas,  the  Licensor  represents  that  it  is  organized 
to  own,  deal  in,  and  grant  licenses  under  letters  patent 
pertaining  to  the  motion-picture  art,  and  that  it  is  the  owner 
of  all  the  right,  title,  and  interest  in  and  to  United  States 
Letters  Patent- 

No.  578185,  dated  March  2,  1897,  for  Yitascope,  granted 
to  Thomas  Armat; 

No.  580749,  dated  April  13,  1897,  for  Vitascope,  granted 
to  Thomas  Armat; 

No.  586953,  dated  July  20,  1897,  for  Phantoscopc, 
granted  to  Charles  F.  Jenkins  and  Thomas  Armat; 

No.  588916,  dated  August  24,  1897,  for  Kinetoscope, 
granted  to  Charles  M.  Campbell  as  the  assignee  of 
Willard  G.  Steward  and  Ellis  F.  Frost; 

No.  629063,  dated  July  18,  1899,  for  Kinetoscopic, 
Camera,  granted  to  American  Mutoscope  Company 
as  the  assignee  of  Herman  Caslet; 

No.  073329,  dated  April  30,  1901,  for  Kinetoscope, 
granted  to  the  American  Vitagraph  Company  as  the 
assignee  of  Albert  E.  Smith; 


No.  673992,  dated  May  14,  1901,  for  Yitascope,  granted 
.  to  Thomas  Armat; 

No.  707934,  dated  August  26,  1902,  for  Projecting 
Kinetoscope,  granted  E.  &  H.  T.  Anthony  &  Co.  as 
assignees  of  Woodvillo  Latham; 

No.  722382,  dated  March  10,  1903,  for  Animated  Pic¬ 
ture  Apparatus,  granted  to  American  Mutoscope  & 
Biograph  Company  as  the  assignee  of  John  A.  Pross; 

No.  744251,  dated  November  17,  1903,  for  Kinetoscope, 
granted  Albert  E.  Smith; 

No.  770937,  dated  September  27,  1904,  for  Kinetoscope, 
granted  the  Vitagraph  Company  of  America  as  the 
assignee  of  Albert  E.  Smith ; 

No.  771280,  dated  October  4,  1904,  for  Winding-Eeel 
granted  Albert  E.  Smith; 

No.  785205,  dated  March  21,  1905,  for  Flame-Shield  for 
Kinetoscopes,  granted  the  Vitagraph  Company  of 
America  as  the  assignee  of  William  Ellwood ;  and 

No.  785237,  dated  March  21,  1905,  for  Film-Holder  for 
Kinetoscopes,  granted  the  Vitagraph  Company  of 
America  as  the  assignee  of  Albert  E.  Smith ; 
all  of  which  said  letters  patent  relate  to  improvements  in 
the  motion  picture  art,  and  that  there  are  no  outstanding 
licenses,  shop  rights,  or  other  rights  under  said  letters  patent, 
or  either  of  them,  except  a  license  for  Parlor  Kinetoscopes 
granted  the  Karmata  Company,  of  Washington,  D.  C., 
under  Letters  Patent  Nos.  578185,  580749,  586953,  and 
673992,  and  certain  alleged  licenses  under  U.  S'.  Letters 
Patent  No.  586953,  which  are  in  dispute,  claimed  to  be 
owned  by  the  Edison  Company  and  the  American  Grapho- 
plionc  Company,  of  Washington,  D.  C.,  and  S.  Lubin,  of 
Philadelphia,  Pennsylvania;  and  excepting  a  license  granted 
by  the  American  Mutoscope  &  Biograpli  Company  to  the 
firm  of  Marvin  and  Casler  to  manufacture  and  sell  cameras 
and  exhibiting  or  projecting  machines  under  letters  patent 
owned  by  it  (some  of  which  are  hereinbefore  referred  to) 
for  use  in  foreign  countries  only,  and  excepting  certain 
licenses  granted  by  the  Armat  Motion  Picture  Company  to 
the  American  Mutoscope  &  Biograpli  Company  under 


54  OHIGINAL  PETITION,  EXHIBIT  3. 

Letters  Patent  Nos.  57S1S5,  580749,  58G953,  58S91G,  and 
G73992,  and  by  the  latter  company  to  the  former  company 
under  Patents  Nos.  707934  and  722382,  which  licenses  are, 
however,  by  agreement  between  said  parties,  suspended  and 
are  not  to  be  acted  upon  until  the  Licensor  becomes  bank¬ 
rupt,  ceases  doing  business,  or  shall  be  dissolved  voluntarily 
or  otherwise,  or  its  charter  shall  be  repealed;  and 

(o)  Whereas,  the  Licensor  is  the  owner  of  all  the  right, 
title,  and  interest  in  and  to  reissued  Letters  Patent  of  the 
United  States  Numbered  12037,  dated  September  30,  1902, 
and  12192,  dated  January  12,  1904,  the  original  Letters  Pat¬ 
ent  whereof  are  Numbered  589108  and  dated  August  31,  1897, 
and  that  there  are  no  outstanding  licenses,  shop  rights,  or 
other  rights  under  said  reissued  letters  patent,  or  either  of 
them,  except  license  agreements  thereunder  between  the 
Edison  Company  and  Pathe  Freros  of  New  York,  dated  May 
20,  1908  (to  go  into  effect  June  20,  1908),  and  between  the 
Edison  Company  and  the  Kalem  Company,  of  New  York;  the 
Essanay  Company,  of  Chicago;  Siegmund  Lubin,  of  Phila¬ 
delphia;  George  Melics  Company,  of  Chicago,  Illinois;  the 
Selig  Polyscope  Company,  of  said  Chicago,  and  the  Vitagrapli 
Company  of  America,  of  New  York,  all  dated  January  31, 
1908;  and 

(d)  Whereas,  the  Edison  Company,  the  Licensee  and  the. 
other  licensees  before  mentioned  under  the  said  reissued 
Letters  Patent,  Numbered  12037  and  12192,  hnve  suspended 
the  operation  of  the  said  license  agreements;  and 

(o)  Whereas,  the  Licensee  is  engaged  in  the  manufacture 
and  sale  of  motion  pictures,  including  the  printing  of  positive 
motion  pictures  from  negntive  motion  pictures  of  the 
Licensee’s  own  production,  and,  relying  upon  the  aforesaid 
representations  of  the  Licensor,  and  induced  thereby,  desires 
to  obtain  from  the  Licensor  a  license  under  said  two  reissued 
Letters  Patent  Numbered  12037  and  12192,  and  Letters 
Patent  Nos.  G29003  and  707934,  and  to  lease  positive  motion 
pictures  for  use  in  exhibiting  or  projecting  machines  contain¬ 
ing  the  inventions,  or  any  of  them,  described  and  claimed  in 
said  Letters  Patent  Nos.  57S185,  680749,  580953,  58891G, 
G73329,  673992,  707934,  ••  722382,  744251,  770937,  771280, 


OBIGINAL  PETITION,  EXHIBIT  3.  55 

785205,  and  785237,  and  to  sell  positive  motion  pictures  on 
film  of  a  width  approximately  one  (1)  inch  or  less  in  certain 
territory  and  on  film  of  any  width  in  certain  territory : 

(/)  Now  therefore,  the  parties  hereto,  for  and  in  considera¬ 
tion  of  the  sum  of  one  dollar  to  each  in  hand  paid  by  the 
other,  and  for  other  good  and  valuable  considerations  from 
each  to  the  other  moving,  receipt  of  all  of  which  is  hereby 
acknowledged,  have  agreed  as  follows : 

1.  The  Licensor  hereby  grants  to  the  Licensee  for  the  tem 
and  subject  to  the  covenants,  conditions,  and  stipulations 
hereinafter  expressed,  the  right  and  license  under  said 
reissued  Letters  Patent  No.  12037  and  Letters  Patent  Nos. 
6290G3  and  707934,  for  the  United  States,  its  territories, 
dependencies,  and  possessions  (hereinafter  called  the  “terri¬ 
tory  aforesaid”)  to  manufacture  and  use  such  a  number  of 
cameras  embodying  the  inventions  of  said  reissued  Letters 
Patent  No.  12037  and  Letters  Patent  Nos.  029003  and  707934, 
as  may  be  necessary  for  the  proper  conduct  of  the  Licensee’s 
business,  and  to  manufacture,  print  and  produce  positive 
motion  pictures  embodying  the  inventions  of  said  reissued 
Letters  Patent  No.  12192,  and  to  lease  the  same  in  the  United 
States,  its  territories,  dependencies,  and  possessions  (with  the 
exceptions  of  its  insular  possessions  and  Alaska),  hereinafter 
referred  to  ns  the  “lease  territory  aforesaid,”  on  film  of  a 
greater  width  than  approximately  one  (1)  inch,  upon  condi¬ 
tion  that  they  be  used  solely  in  exhibiting  or  projecting 
machines  containing  the  inventions  or  some  of  them  of  said 
Letters  Patent  Nos.  578185,  580749,  580953,  588916,  G73329, 
673992,  707934,  722382,  744251,  770937,  771280,  785205  and 
785237,  and  licensed  by  the  Licensor,  and  to  sell  positive 
motion  pictures  embodying  the  invention  of  said  reissued 
Letters  Patent  No.  12192,  on  film  of  a  width  approximately 
one  (1)  inch  or  less  in  the  “lease  territory  aforesaid”:  and  on 
film  of  any  width  in  or  for  said  insular  possessions  and  Alaska 
and  foreign  countries,  hereinafter  referred  to  as  “said  export 
territory”  or  “for  export.” 

The  Xiccnse  hereby  granted  is  personal  to  the  Licensee 
and  docs  not  include  the  right  to  dispose  of,  in  the  “territory 
aforesaid,”  any  cameras  embodying  any  invention  covered 
65498-12 — 8 


Jfc 


5C  OltlGINAL  PETITION,  EXHIBIT  3. 

by  said  reissued  Letters  Patent  No.  12037  and  Letters 
Patent  No.  G290G3  and  707934;  and,  in  the  event  of  the 
permanent  discontinuance  or  retirement  from  business  of 
the  Licensee  for  a  period  of  six  consecutive  months,  the 
license  hereby  granted  shall  he  immediately  terminated. 

2.  The  Licensor,  for  itself,  its  successors,  assigns  and  legal 

representatives,  hereby  releases,  acquits,  and  discharges  the 
Licensee  from  any  and  all  claims,  demands,  and  liability  for 
profits  and  damages,  because  of  any  infringement  by  the 
Licensee  of  any  or  all  of  the  aforesaid  United  Letters  Patent 
Nos.  578185,  580749,  58G953,  58891G,  G290G3,  G73329, 

673992,  707934,  722382,  744251,  770937,  771280,  785205, 

and  785237,  and  reissued  Letters  Patent  Nos.  12037  and 
12192,  or  use  by  the  Licensee  of  the  inventions,  or  any  of 
them,  covered  by  said  letters  patent  or  either  of  them  prior 
to  the  date  hereof. 

3.  The  Licensee  hereby  recognizes  and  admits  the  validity 

of  said  reissued  Letters  Patent  No.  12037,  so  far  as  the  first 
three  claims  thereof  are  concerned,  and  the  validity  of  said 
reissued  Letters  Patent  No.  12192  and  Letters  Patent  Nos. 
578185,  580749,  586953,  58891G,  629063,  673329,  673992, 

707934,  722382,  744251,  770937,  771280,  '  785205,  and 

785237,  and  the  Licensee  agrees  not  to  contest  or  question 
the  same  during  the  continuance  of  this  agreement. 

4.  The  Licensee  covenants  and  agrees  that  in  the  manu¬ 
facture  of  motion  pictures,  both  negative  and  positive  in  the 
"territory  aforesaid,”  during  the  continuance  of  this  agree¬ 
ment,  the  Licensee  will  use  exclusively  sensitized  film  manu¬ 
factured  and  sold  in  the  United  States  by  a  manufacturer 
or  manufacturers  authorized  by  the  Licensor,  such  sensi¬ 
tized  film  hereinafter  called  “licensed  film,”  nnd  that  the 
Licensee  will  not,  in  the  “territory  aforesaid,”  purchase  or 
otherwise  acquire  or  lease  or  sell  or  otherwise  dispose  of  or 
deal  in,  motion  pictures  produced  on  or  by  the  use  of  any 
other  film  than  such  “licensed  film,”  nor  sell  or  otherwise 
dispose  of  any  negative  motion  pictures. 

The  Licensor  further  covenants  nnd  agrees  that  it  will, 
in  an  agreement  in  writing  with  each  manufacturer  of 
“licensed  film,”  obligate  such  manufacturer,  so  long  ns 


OltlGINAL  PETITION,  EXHIBIT  3.  57 

the  latter  has  the  exclusive  right  to  make  and  sell  such 
“licensed  film,”  not  to  knowingly  furnish  or  sell,  in  the 
“territory  aforesaid,”  except  “for  export,”  sensitized  film 
for  the  commercial  production  of  negative  and  positive 
motion  pictures  to  anyone  but  the  Licensee,  and  the  addi¬ 
tional  licensees  hereinafter  provided  for,  except  to  the 
extent  of  2%  per  cent  of  the  total  amount  of  such  “licensed 
film”  supplied  by  such  manufacturer  to  the  parties  to  the 
license  agreements  referred  to  in  paragraph  (c)  during  the 
year  preceding  June  20,  1909,  and  to  the  Licensee  and  the 
additional  licensees  hereinafter  provided  for,  during  any 
one  year  thereafter  during  the  continuance  of  such  agree¬ 
ment,  which  amount  such  manufacturer  shall  have  the  right 
to  furnish  or  sell,  in  the  “territory  aforesaid,”  to  persons 
not  engaged  in  the  business  of  manufacturing,  leasing,  sell¬ 
ing,  loaning,  renting  out,  or  otherwise  disposing  of  or  dealing 
in  motion  pictures  in  the  “territory  aforesaid”;  and  with 
the  further  exception  flint  such  manufacturer  may  also 
reserve  the  right  to  manufacture  and  sell  sensitized  film 
suitable  for  the  commercial  production  of  negative  and 
positive  motion  pictures,  of  a  width  not  to  exceed  approxi¬ 
mately  one  (1)  inch  in  the  “territory  aforesaid,”  to  persons, 
firms,  and  corporations  engaged  in  the  business  of  manufac¬ 
turing,  leasing,  selling,  loaning,  renting  out,  or  otherwise 
disposing  of  or  dealing  in  motion  pictures  in  the  “territory 
aforesaid,”  but  upon  the  condition  that  in  case  any  of  them 
produces  thereon  any  picture  greater  in  size  than  approxi¬ 
mately  three-quarters  (%)  of  an  inch  on  n  line  cither  parallel 
to  or  at  right  angles  to  the  edge  of  such  film,  and  such 
manufacturer  has  knowledge  thereof,  such  manufacturer 
will  cease  supplying  such  film  to  any  person,  firm,  or  cor¬ 
poration  so  doing;  and  with  the  further  exception  that  such 
manufacturer  may  also  reserve  the  right  to  manufacture 
and  sell  in  the  “territory  aforesaid”  such  sensitized  film 
suitable  for  the  commercial  production  of  negntive  nnd  posi-' 
tive  motion  pictures  of  any  width,  to  persons,  firms,  and 
corporations  now  having  an  established  business  of  manu¬ 
facturing  motion  pictures  in  any  country  foreign  to  the 
United  States,  who  now  manufacture  negative  and  positive 


motion  pictures  in,  the,  United!  States,  on  who.  may,  after  the, 
"  £  agreement  commence  the  manufacture  oD  nega- 
^e  or  positive0  motion,  pictures  in  the  United  States 

Tlie.  Licensor  further  covenants  and  agrees  ^  J 
royalties  which  it  will  charge  to  and  receive  from  the  Licensee 
for  “licensed,  film”  (,and  which,  are  to.  be  included,  by  to 
manufacturer  or  manufacturers  in  the  prices,  charged  f 
“tensed  fllt>  to  the  Licensee  and- paid  over  to.  the  Lmenson), 
shall  not  for  “licensed  film”  of  a  width  approximately 
one  inch  and,  three-eighths  of,  an  inch  or- thir.ty,ave 

(351,  millimeters,  purchased  by  the  Licensee,  during  to  yean 

during  the  continuance  of,  this  agreement,  as  hereafter 
provided;  exceeding  the  following  rates;  that  is  to- say,: 

Tto’ shipments,  of  such,  “licensed  film”  to  the  Licensee 
or  the  Licensee's  orders,  for  any,  such,  year  be.  four  million, 
running  feet  or  less,  a  royalty  of  one-half  (i/2).  cent  per  run- 
nine  foot  on  the  total,  number  of  running  feet  for  that  year,, 
if  such  shipments,  on  the  Licensee’s  orders,  of.  such  “licensed, 
filin’’  for  any  such  year  exceed  four  million,  running,  feet 
but  do  not  exceed  six  million,  running  feet,  a  royalty  of.  four 
and  one-half  (-4%-):  mills  per  running  foot  on.  the,  total  number 
of  running  feet  for  that  year;  if  such,  shipments,  on  the 
Licensee’s  orders,  of  such,  “licensed-  film!’  for  any  such  year, 
exceed  six  million  running  feet  but  do,  not  exceed,  eight 
million  running  feet,  a  royaltyof  four  (4),  mills- per  running; 
foot  on.  the  total-  number,  of  winning  feet  for  tlmt  year;  if 
such  shipments,  on  the-  Licensee’s,  orders,  of.  such,  “licensed, 
film”  for.  any  such  yenr  exceod,  eight,  million,  running  feet 
but  do  not  exceed  ten  million,  running,  feet,  a,  royalty  of.  three, 
and  three-quarters  (33/,,)  mills  per  running,  foot  on  the.  total- 
number- of  running  feet  for  tlmtr  year;. and,  if  such. shipments,, 
on  the-  Licensee’s  orders,  of  snoli.  “licensed,  film!’  for.  any 
such;  year  exceed  ten,  million,  running  feet,  a»  royalty,  of  three 
and,  one-quarter  (3%)  nulls-  per.  running  foot  on  the  total- 
number  of  running,  feet  for  that  year.  And,  for  “licensed, 
film’’  narrower  or  widor  than  approximately  one  and-  throe- 
eighths  (13/S  im)  inch-  or  thirty-five  (35)  millimeters,,  the 
nbove-montioned  royalty  rates-  shall,  he  reduoed  or  increased 


ORIGINAL  PETITION,  EXHIBIT  3.  59 

in  proportion  to  to  reduction  or  increase  in  width  of  such 
narrower  or  -wider  “licensed  film”  below  or  above  the 
width  of  such  “licensed  fllm”  of  approximately  one  and 
three-eightlis  (1%  in.)  inch  or  thirty-five  (35)  millimeters. 

The  Licensor  and  Licensee  further  mutually  covenant 
and  agree  that  the  manufacturer  of  such  “licensed  Him” 
shall  in  to  first  instance— that  is  to  say,  when  such  film  is 
hilled  and  shipped  by  it— charge  the  Licensee  with  its  price 
per  running  foot  plus  the  maximum  royalty  aforesaid,  and 
on  the  expiration  of  each  year,  counting  from  June  20tli, 
1909,  shall  adjust  the  royalty  account  of  the  Licensee  as  to 
“licensed  film”  so  billed  and  shipped  to  and  paid  for  by 
to  Licensee,  according  to  the  royalty  schedule  aforesaid, 
returning  to  to  Licensee  any  amount  the  Licensee  shall 
have  overpaid,  according  to  said  schedule,  and  paying  the 
balance  to  to  Licensor;  and  that  the  royalties  which  may 
hereafter  be  paid  to  the  manufacturer  of  such  “licensed 
film”  after  the  date  hereof  and  up  to  June  20,  1909,  under 
this  agreement,  shall  he  adjusted  and  the  excess  returned, 
in  the  same  manner,  the  royalty  rate  to  be  charged  for  such 
period  being  to  rate  that  would  have  been  charged  if  the 
shipments  of  “licensed  film”  to  the  Licensee  had  been 
continued  for  a  year  at  the  same  rate  at  which  shipments 
were  made  for  such  period. 

The  Licensor  further  agrees  that  the  dealings  between 
the  Licensee  and  the  authorized  manufacturer  or  manu¬ 
facturers  from  whom  the  Licensee  purchases  such  “licensed 
film”  shall,  in  so  far  ns  the  number  of  running  feet  ordered 
by  or  shipped  to  the  Licensee  or  anything  that  would  indi¬ 
cate  or  disclose  the  number  of  such  feet  is  concerned,  be  a 
matter  of  confidence  between  the  Licensee  and  such  manu¬ 
facturer  or  manufacturers,  who  shall  hot  be  at  liberty  to 
disclose,  and  moreover  shall  be  bound  in  writing  not  to 
disclose,  directly  or  indirectly,  to  the  Licensor  or  any  of 
the  additional  licensees  hereinafter  provided  for,  the  num¬ 
ber  of  such  feet  of  “licensed  film”  so  ordered  by  or  shipped 
to  the  Licensee;  the  Licensor  further  agreeing  to  so  arrange 
or  provide  for  the  reports  and  royalty  payments  to  be  made 
to :  it  by  such  manufacturer  or  manufacturers  that  tlie 


CO  ORIGINAL  PETITION,  EXHIBIT  3. 

latter  shall  make  such  reports  and  royalty  payments  in 
gross  as  to  all  of  the  licensees  to  whom  shipments  of  such 
“licensed  film”  are  made,  and  without  specifying  the 
number  of  running  feet  of  “licensed  film”  so  shipped  to  any 
of  them,  either  by  a  statement  in  writing  of  the  number  of 
such  feet  or  the  amount  of  royalties  paid  or  to  be  paid  by 
such  manufacturer  or  manufacturers  for  or  on  account 
thereof. 

The  Licensor  and  Licensee  further  mutually  covenant 
and  agree  that  no  royalty  other  than  or  in  addition  to  that 
provided  for  in  this  paragraph  shall  be  charged  to  or  col¬ 
lected  from  the  Licensee  by  the  Licensor  up  to  Juno  20, 
1910,  or  during  any  renewal  of  this  agreement  up  to  August 
31,  1914,  the  date  of  the  expiration  of  said  reissued  Letters 
Patent  Nos.  12037  and  12192,  and  no  royalty  whatever 
shall  be  charged  to  or  collected  from  the  Licensee  by  the 
Licensor  after  cither  the  first,  second,  and  third  claims  of 
said  reissued  Letters  Patent  No.  12037  and  cither  of  the 
claims  of  said  reissued  Letters  Patent  No.  12192,  in  any 
suit  as  hereinafter  provided  for,  for  infringement  thereof, 
are  held  invalid  by  a  court  that  last  hears  and  decides 
such  suit,  or  after  August  31,  1914,  during  any  renewal  of 
this  agreement;  and  that  the  Licensor  shall  charge  royalties 
or  rents  for  the  use  of  all  exhibiting  or  projecting  machines 
capable  of  exhibiting  or  projecting  motion  pictures  on  film 
of  a  width  greater  than  approximately  one  (1)  inch,  con¬ 
taining  the  inventions,  or  any  of  them,  described  and  claimed 
in  the  aforesaid  Letters  Patent  Nos.  578185,  580749,  58G953, 
58891G,  673329,  G73992,  707934,  722382,  744251,  770937, 
771280,  785205,  and  785237,  licensed  by  the  Licensor  and 
that  all  such  royalties  or  rents  shall  be  collected  by  the 
Licensor,  directly  or  indirectly  from  the  exhibitors  using  such 
machines,  and  shall  be  fixed  by  the  Licensor  and  charged  and 
collected  from  such  exhibitors  by  the  Licensor  at  such  a  rate 
as  to  average  as  nearly  as  possible  a  royalty  or  rental  of 
two  dollars  (52.00)  per  week  for  each  such  licensed  machine 
in  use. 

5.  The  Licensee  further  covenants  and  agrees  not  to  sell 
dr  otherwise  dispose  of  or  offer  for  sale,  in  the  “territory 


ORIGINAL  PETITION,  EXHIBIT  3.  G1 

aforesaid,”  unexposed  positive  or  negative  “licensed  film” 
during  the  continuance  of  this  agreement;  but  this  provision 
shall  not  prevent  the  Licensee  from  selling  as  refuse,  in  the 
“territory  aforesaid,”  second-hand  positive  or  negative 
motion  pictures  or  motion  pictures  which  have  been  used  or 
become  shopworn  or  in  any  way  damaged,  to  a  manufacturer 
or  manufacturers  of  “licensed  film”  or  to  a  manufacturer  to 
manufacture  other  articles  than  film  therefrom,  but  only 
after  they  have  been  rendered  by  the  Licensee  unsuitable  for 
use  as  motion  pictures  by  cutting  or  otherwise  defacing 
them;  or  from  selling  exposed  positive  or  negative  film 
(either  waste  or  in  rolls)  known  as  “blank  film”  for  use  by 
dealers,  renters,  or  exhibitors  for  leaders  or  for  spacing  or 
for  similar  purposes,  but  which  shall  not  and  can  not  be 
otherwise  employed  for  the  exhibition  of  motion  pictures. 

G.  The  Licensee  further  covenants  and  agrees  not  to  lease, 
loan,  rent  out,  sell  or  offer  for  sale,  or  otherwise  dispose  of  in 
the  “territory  aforesaid,”  motion  pictures  to  anyone  pur¬ 
chasing  or  otherwise  obtaining,  leasing,  using,  loaning, 
renting  out,  selling,  offering  for  sale,  or  otherwise  disposing 
of  or  dealing  in  motion  pictures  containing  the  invention  of 
said  reissued  Letters  Patent  No.  12192,  not  the  output  of  the 
licensee  or  of  the  additional  licensees  hereinafter  provided 
for.  . 

7.  The  Licensee  further  covenants  and  agrees  to  mark 
each  and  every  camera  which  the  Licensee  may  make  or 
use  under  this  agreement  embodying  the  inventions  of 
reissued  Letters  Patent  No.  12037,  Letters  Patent  Nos. 
G290G3  and  707934,  or  either  of  them,  with  the  word  “Pat¬ 
ented”  followed  by  the  dates  of  grant  of  all  of  the  said 
letters  patent,  the  inventions  claimed  in  which  are  embodied 
in  the  said  camera  or  apparatus,  and  to  photographically 
print  the  Licensee’s  trade-mark  in  each  picture  of  at  least 
one  scene  of  each  subject  of  positive  motion  pictures  on 
film  of  a  greater  width  than  .  approximately  one  (1)  inch 
manufactured  by  the  Licensee  and  leased  in  the  “lease 
territory  aforesaid,”  and  to  mark  conspicuously  on  the 
labels  which  shall  be  placed  on  boxes  or  packages  containing 
positive  motion  pictures  on  film  of  a  greater  width  than 


G2  ORIGINAL  PETITION,  EXHIBIT  3. 

approximately  one  (1)  inch  manufactured  by  the  Licensee 
in  the  “territory  aforesaid,”  with  the  following  words  and 
figures : 

LICENSED  MOTION  PICTCBE.  ;  ■ 

Manufactured  and  leased  by  and  property  of 


(Patented  in  the  United  States  August  31,  1S97;  reissued 
January  12,  1904). 

The  enclosed  motion  picture  is  leased  only  and  upon  the 
following  terms  and  conditions : 

1.  That  the  lessee  shall  not  sell  or  otherwise  dispose  of  ' 
the  same  outright,  but  shall  have  only  the  right  to  sublet 
or  use  such  motion  picture. 

2.  That  the  lessee  shall  permit  such  motion  pictures  to  be 
exhibited  only  on  motion  picture  projecting  machines 
licensed  by  the  Motion  Picture  Patents  Company  of  New 
Jersey  under  its  patents  covering  such  projecting  machines. 

3.  That  the  lessee  shall  not  sublet  such  motion  picture  or 
any  other  motion  picture  containing  the  invention  of  the 

above  reissued  patent  for  use  in  any  motion-picture  exhibi-  I 

tions  at  a  lower  subrental  price,  directly  or  indirectly,  than 
that  agreed  upon  (if  any)  in  the  contract  of  lease  between  the 
lessee  and  the  lessor  of  this  picture. 

4.  That  the  lessee  or  user  thereof  shall  not  make  or  permit 
others  to  make  any  reproduction,  commonly  known  as  a 
“dupe,”  of  such  motion  picture  or  any  other  motion  picture 
containing  the  inventions  of  the  above  reissued  patent. 

5.  That  the  lessee  or  user  thereof  shall  not  remove  the 
trade-mark  or  trade  name  or  title  therefrom. 

0.  That  the  violation  of  any  of  the  foregoing  conditions 
entitles  the  lessor  to  immediate  possession  of  this  motion 
picture  without  liability  for  any  price  which  the  lessee  or 
the  person  in  whose  possession  it  is  found  may  have  paid 
therefor. 

The  Licensor  further  covenants  and  agreed  to  use  all 
possible  diligence  in  licensing  exhibiting  or  projecting 
machines  now  in  use  in  the  “lease  territory  aforesaid” 


ORIGINAL  PETITION,  EXHIBIT  3.  03 

embodying  any  or  all  of  the  inventions  described  and  claimed 
in  the  said  Letters  Patent  Nos.  578185,  580749,  58C953, 
58891G,  673329,  073992,  707934,  722382,  744251,  770937, 
771280,  785205,  and  785237,  and  that  royalties  or  rents  from 
the  users  of  such  exhibiting  or  projecting  machines  will  not 
be  exacted,  directly  or  indirectly,  until  February  1st,  1909. 

8.  The  Licensee  further  covenants  and  agrees  not  to  use, 
in  the  production  of  negative  or  positive  motion  pictures, 
under  this  agreement,  the  negative  or  positive  motion 
pictures  (or  reproductions  commonly  known  as  “dupes” 
of  the  negative  or  positive  motion  pictures),  of  any  other 
manufacturer  or  person,  firm,  or  corporation  located  either 
in  the  “territory  aforesaid”  or  in  any  foreign  country, 
whether  the  same  have  or  have  not  been  copyrighted  in  the 
“territory  aforesaid”  or  in  any  foreign  country. 

9.  The  Licensor  has  established  the  following  scale  of  mini¬ 
mum  prices  (which  the  Licensee  admits  is  a  fair  and  reasona¬ 
ble  one)  for  the  lease  of  positive  motion  pictures  on  film  of  a 
greater  width  than  approximately  one  (1)  inch  in  the  “lease 
territory  aforesaid”  embodying  the  invention  of  said 
reissued  Letters  Patent  No.  12192: 

hist .  13  cents  per  running  foot. 

Standing  order. .  11  cents  per  running  foot. 

Films  leased  between  two  andfour  months  aftor  release 

Films  leased  between  four  and  six  months  after  release 

date... .  7  cents  per  running  foot. 

Films  leased  over  six  months  ofter  release  date .  5  cents  per  running  foot. 

The  Licensor  and  Licensee  further  mutually  covenant 
and  agree  that  the  above  scale  of  minimum  prices  is  to  remain 
in  force  until  a  new  scale  of  prices  is  adopted,  each  such 
new  scale  to:  be  adopted,  during  the  continuance  of  this 
agreement,  by  a  majority  vote  to  be  forthwith  communi¬ 
cated  to  the  Licensor  of  the  Licensee  and  the  several  addi¬ 
tional  licensees  hereinafter  provided  for,  or  such  of  them  ns 
may  at  the  time  be  licensees  on  the  basis  of  one  vote  for 
each  thousand  running  feet  of  new  subjects  on  film  of  a 
greater  width  than  approximately  one  (1)  inch  offered  for 
lease  or  sale  in  the  “territory  nforesnid”  by  ench  licensee 
.during  the  year  preceding  the  taking  of  such  vote;  anil 
55498 -12-—9 


. - . .  . -i. 


G4  ORIGINAL  PETITION,  EXniBIT  3. 

they  further  covenant  and  agree  that  any  changes  which 
may  hereafter  be  so  made  and  communicated  to  the  Licensor 
in  said  scale  of  prices,  and  of  which  the  Licensee  shall  be 
notified  in  writing  by  the  Licensor,  shall  be  accepted  and 
adopted  by  the  Licensee  in  the  place  and  stead  of  the  scale 
of  prices  above  given  or  of  any  substitute  or  substitutes 
therefor  adopted  prior  to  such  change.  It  is,  however, 
expressly  mutually  covenanted  and  agreed  that  in  no  case  shall 
such  new  scale  of  prices,  either  list  or  standing  order,  be 
less  than  nine  (0)  cents  per  running  foot  for  any  motion 
picture  leased  within  four  months  of  the  date  of  release  of 
the  said  motion  picture. 

By  the  expression  “running  feet  of  new  subjects”  above 
referred  to,  and  hereafter  used,  the  parties  hereto  mean 
the  aggregate  amount  ascertained  by  adding  together  the 
individual  number  of  running  feet  of  one  print  of  each  and 
every  new  motion  picture  on  film  of  a  greater  width  than 
approximately  one  (1)  inch,  regularly  listed  and  offered  for 
lease  in  the  “lease  territory  aforesaid.” 

The  Licensor  and  Licensee  further  mutually  covenant  and 
agree  that  in  case,  during  the  continuance  of  this  agreement, 
there  should  be  for  any  reason  only  three  such  licensees,  i 

then,  and  in  such  case,  the  Licensor  may  adopt  a  minimum 
scale  of  prices  in  the  place  and  stead  of  the  minimum  scale  of 
prices  above  given  or  of  any  substitute  or  substitutes  there¬ 
for  adopted  in  the  manner  above  provided,  which,  however, 
shall  in  no  case  be  above  the  minimum  scale  of  prices  that 
may  be  in  force  at  the  time  the  Licensor  adopts  the  said  new 
minimum  scale  of  prices,  which  said  new  minimum  scale  of 
prices  shall  be  binding  upon  the  Licensee,  but  only  after 
receiving  notice  thereof  in  writing  from  the  Licensor. 

10.  The  Licensor  and  Licensee  further  mutually  covenant 
and  agree  that  an  order  in  the  “lease  territory  aforesaid,” 
for  one  or  more  positive  motion  pictures  of  each  and  every 
new  subject  made  by  the  Licensee  (except  clirono-photo- 
graphic  subjects  and  other  special  subjects  that  are  an¬ 
nounced  and  advertised  as  special  by  the  Licensee  and  of 
which  no  copy  or  print  is  leased  by  the  Licensee  for  less  than 
list  price  within  two  (2)  months' after  release  date)  when 


ORIGINAL  PETITION,  EXUIBIT  3.  Go 

offered  for  lease  in  the  regular  order  of  business,  shall  con¬ 
stitute  a  “standing  order”  within  the  meaning  of  the  scale  of 
prices  aforesaid  or  any  substitute  therefor  hereafter  adopted, 
said  standing  order  to  remain  in  force  for  not  less  than  four¬ 
teen  (14)  consecutive  days;  and  the  parties  hereto  further 
mutually  covenant  and  agree  that  the  minimum  price  at 
which  any  additional  positive  motion  pictures  shall  be  leased, 
in  the  “lease  territory  aforesaid,”  subsequent  to  the  filling 
of  a  standing  order,  shall  be  the  same  per  running  foot  as  the 
pictures  furnished  on  such  standing  order,  unless  otherwise 
provided  for  in  the  scale  of  prices  aforesaid  or  any  substitute 
therefor  hereafter  adopted.  All  positive  motion  pictures 
which,  may  be  hereafter  leased  in  the  “lease  territory  afore¬ 
said,”  to  persons  not  having  a  standing  order,  as  above 
defined,  shall  in  every  case  be  leased  at  not  less  than  the  list 
price  mentioned  in  said  scale  of  prices  or  any  substitute 
therefor  hereafter  adopted,  except  it  be  otherwise  provided 
by  a  majority  vote  of  the  Licensee  and  the  several  additional 
licensees  hereinafter  provided  for,  or  such  of  them  as  may 
at  the  time  be  licensees,  on  the  basis  of  one  vote  for  each 
thousand  running  feet  of  new  subjects,  on  film  of  a  greater 
width  than  approximately  one  (1)  inch,  offered  for  lease  or 
sale  in  the  “territory  aforesaid”  by  each  licensee  during  the 
year  preceding  the  talcing  of  such  vote,  and  except  as  pro¬ 
vided  for  in  paragraph  12  as  to  “special  motion  pictures.” 

11.  The  Licensor  and  Licensee  further  mutually  covenant 
and  agree  that  positive  motion  pictures  made  by  or  for  the 
Licensee  and  unsold  prior  to  the  date  hereof,  shall  be  subject 
to.  the  scale  of  prices  aforesaid  and  shall  be  leased  in  the 
‘Hease  territory  aforesaid”  at  not  less  than  the  prices  fixed 
in  said  scale  for  positive  motion:  pictures  as  provided 'for  in 
paragraphs  9  and  10. 

12.  The  Licensor  and  Licensee  further  mutually  covenant  ' 
and 'agree  that  in  the  case  of  so-called  “special  motion  pic- 

Etures”  (where  it  is  ngreed  by  the  Licensee  that  the  negative 
shall  lie  the  exclusive  property  of  the  person  ordering  the 
same,  although  remaining  in  the  care  and  i  custody  of  the' 
Licensee,  and  where  positive  prints  therefrom  shall  be  made 
from  time  to  lime  on  the  order  of  such  person),  the  price  to 


6G  OHIO  INAL  PETITION,  EXHIBIT  3. 

be  paid  for  the  making  of  sncb  negative  in  the  “territory 
aforesaid”  shall  not  be  less  than  one  dollar-  ($ff)  per  running 
foot,  and  that  the  price  at  which  positive  prints  therefrom 
shall  he  leased  in  the  “territory  aforesaid,”  shall  not  be  less 
than  fifteen  (15)  cents  per  running  foot 

13.  The  Licensee  further  covenants  and  agrees  not  to  lease 
motion  pictures  in  the  “lease  territory  aforesaid,”  under  any 
circumstances,  either  directly  or  indirectly,  during  the  con- 
tinuance  of  this  agreement,  at  lower  prices  than  those  fixed 
and  1C2StnWislled  as  provicle(1  for  in  paragraphs  0,  10,  11, 

14.  It  is  further  and  mutually  covenanted  and  agreed  by 
the  Licensor  and  Licensee  that  the  Licensee  shall  have  the 
right  to  sell  motion  pictures  in  or  for  “said  export  territory,” 
and  that  the  prices  above  referred  to  in  paragraphs  0,  10  11 
and  12,  or  any  substitute  or  substitutes  for  the  same  hereafter 
adopted,  shall  not  apply  to  sales  or  shipments  of  motion 
Pictures  made  bona  fide  for  export,  when  the  goods,  addressed 
to  the  purchaser,  agent,  or  consignee,  are  delivered  to  the 
vessel  or  to  a  transportation  company  for  transportation  to 

said  export  territory,”  and  not  otherwise. 

The  Licensor  and  Licensee  further  mutually  covenant  and 
agree  that  in  no  case  shall  sales  “for  export”  of  motion  pic¬ 
tures  be  knowingly  made  by  the  Licensee  to  persons,  firms 
or  corporations  whom  such  Licensee  has  reason  to  believe 
sale  rr  tllem  int°  tIla  <<lea8e  tepritol7  aforesaid”  for 

15.  The  Licensor  and  the  Licensee  further  mutually 

covenant  and  agree  that,  except  as  provided  for  in  para¬ 
graph  5,  the  Licensee  will  not  sell  or  lease,  or  offer  for  sale 
or  lease  m  the  “territory  aforesaid”  at  reduced  prices, 
second-hand  motion  pictures  or  motion  pictures  which  have 
damaged  ^  ^  bGC°me  Sh°P'Vorn  or  “  any  way 

16.  The  Licensor  and  the  Licensee  further  mutunllv 

covenant  and  agree  that  in  the  'dense  territoiy  aforesaid  ” 
all  leases  of  positive  motion  pictures  shall  be  at  the  prices 
hereinbefore  provided  for,  without  the  allowance  of  an?  dis- 
counts  or  rebates  or  other  reduction  (except  such  as  may  he 


ORIGINAL  PETITION,  EXHIBIT  3.  67 

adopted  by  the  unanimous  votes  of  all  the  licensees)  by  which 
a  lessee  might  acquire  positive  motion  pictures  at  lower 
prices  than  those  set  forth  in  Paragraphs  9,  10,  11,  and  12, 
or  any  substitutes  therefor  hereafter  adapted,  and  that  the 
Licensee  will  not  dispose  of  such  positive  motion  pictures  os 
premiums,  or  by  lottery,  or  raffle,  or  any  game  of  chance, 
or  in  any  way  whereby  they  may  be  acquired  directly  or 
indirectly  for  less  than  the  prices  set  forth  in  paragraphs  9, 
10,  11,  and  12,  or  substitutes  therefor. 

The  Licensee  further  covenants  and  agrees  that,  in  the 
“lease  territory  aforesaid,”  the  Licensee  will  not  sell  or  offer 
for  sale  other  goods  or  merchandise  at  less  than  current 
prices  in  order  to  induce  the  lease  of  positive  motion  pictures, 
nor  present  or  donate  other  goods  or  merchandise  or  prizes, 
or  make  use  of  credit  cards  or  trading  stamps,  or  offer  any 
premiums  of  any  kind  whatsoever  to  induce  the  lease  of 
such  positive  motion  pictures. 

17.  It  is  further  mutually  covenanted  and  agreed  by  and 
between  the  Licensor  and  Licensee  that  no  lease  of  positive 
motion  pictures  on  film  of  a  greater  width  than  approxi¬ 
mately  one  (1)  inch  shall  be  made  in  the  “lease  territory 
aforesaid”  by  the  Licensee,  except  upon  and  subject  to  the 
following  terms  and  conditions,  the  substance  of  which  (with 
the  exception  of  the  condition  as  to  the  return  of  positive 
motion  pictures  hereinafter  referred  to)  shall  be  expressed 
in  a  printed  notice  on  the  labels,  as  provided  for  in  para¬ 
graph  7,  accompanying  each  positive  motion  picture,  namely : 
(l).That  the  lessee  of  such  positive  motion  picture  shall  not 
sell  or  otherwise  dispose  of  the  same  outright,  but  shall  only 
have  the  right  to  use  such  positive  motion  picture  in  giving 
motion-picture  exhibitions  in  machines  licensed  by  the 
Licensor  under  the  said  letters  patent  Nos.  578185,  580749, 
5S6953,  5SS916,  G73329,  673992,  707934,  722382,  744251, 
770937,  771280,  785205,  and  785237,  or  one  or  more  of  them, 
or  under  any  other  letters  patent  that  it  may  hereafter 
acquire  or  control,  or  to  sublease  such  motion  picture  for 
use  in  such  machines,  and  that  (2)  the  lessee  shall  not  make 
or  permit  others  to  make  any  reproduction  commonly  known 
ns  a  “dupe”  of  such  positive  motion  picture  or  any  other 


ORIGINAL  PETITION,  EXHIBIT  3. 


positive  motion  picture  containing  the  invention  of  said 
reissued  letters  Patent  No.  12192,  or  (3)  sublease  the  same 
or  any  other  positive  motion  picture  on  film  of  a  greater 
width  than  approximately  one  (1)  inch  containing  the  inven¬ 
tion  of  said  reissued  Letters  Patent  No.  12192,  for  use  in 
giving  motion-picture  exhibitions  at  a  lower  lease  price 
directly  or  indirectly  than  that  prescribed  by  the  Licensee 
at  the  time  of  the  lease  of  such  motion  picture,  and  (4)  that 
the  lessee  of  such  positive  motion  picture  shall  not  remove 
the  trade  mark  or  trade  name  or  title  therefrom,  and  (5)  that 
the  lessee  shall  return  to  the  Licensee  from  whom  such  posi¬ 
tive  motion  picture  has  been  leased  (without  any  payment 
therefor  except  the  transportation  charges  incident  to  the 
return  of  the  same)  on  the  first  day  of  every  month,  begin¬ 
ning  with  February  1,  1909,  an  amount  of  positive  motion 
pictures  (on  film  of  a  greater  width  than  approximately  one 
(1)  inch)  in  running  feet '  (not "  leased  by  the  Licensee  over 
six  months  before)  and  of  the  make  of 'the  licensee,  to  whom 
it  is  returned,  equal  to  the  amount  that  was  so'leascd  during 
the  sixth  month  preceding  the  date  of  each  such  return; 
with  the  exception,  however,  that  where  any  such  positive 
motion  pictures  are  destroyed  by  fire  or  lost  in  transportation, 
and  proof  satisfactory  to  the  Licensee  is  furnished  as  to  such 
destruction  or  loss,  the  amount  so  destroyed  or  lost  shall  be 
deducted  from,  the  amount  to  be  returned,  as  aforesnid. 

It  is  further  mutually  covenanted  and  agreed  by  and  be¬ 
tween  the  Licensor  and  Licensee  that  the  subleasing  price 
aforesaid;  for  subleasing  of  positive  motion  pictures,  on  film 
of  a  greater  width  than  approximately  one  (1)  inch,  shall  he 
Axed  (and  which  may  be  changed  in  the  same  manner  during 
the  continuance  of  this  agreement,  ns  may  also  the  fifth  con-' 
dition  before  recited  .in  this  paragraph)  by  a  majority  vote 
of  the  Licensee  and  the  several  additional  licensees  hereinafter 
provided  for  or  such  of  them  as  may  at  the  time  be  licensees, 
on  the  basis  of  one  vote  for  each  thousand  running  feet  of  new 
subjects,  on  film  of  a  great*  width  than  approximately  one 
(1)  .inch,  offered  for  lease;*  sale  in  the  “tereitnry  aforesaid”' 
the  year1  preceding  the  .'taking  of 
such  vote.  .  •  ■*'. 


OBIQINAL  POTITION,  EXHIBIT  3.  G9 

The  Licensee  further  covenants  and  agrees  that  in  the 
“lease  territory  aforesaid”  the  Licensee  will  not  discriminate 
in  favor  of  any  lessee,  or  place  upon  any  motion  pictures  any 
restrictions  other  than  those  specified  in  this  paragraph  and 
paragraph  7  hereof,  unless  authorized  by  a  majority  vote  of 
the  Licensee  and  the  several  additional  licensees  hereinafter 
:  provided  for,  or  such  of  them  as  may  at  the  time  bo  licensees. 

18.  The  Licensee  covenants  and  agrees  that  in  the  “lease 
territory  aforesaid”  the  Licensee  will  dispose  of  the  positive 
motion  pictures,  on  film  of  a  greater  width  than  approxi- 
,!  mately  one  (1)  inch,  manufactured,  produced,  or  printed  by 

the  Licensee,  only  by  the  sale  “for  export,”  and  shipment 
i  thereof  into  “said  export  territory”  or  by  the  lease  thereof 

to  others  for  the  purpose  only  of  either  subleasing  the  same 
to  persons,  firms,  or  corporations  using  such  motion  pictures  for 
giving  exhibitions  thereof  in  exhibiting  or  projecting  machines 
licensed  by  the  Licensor  containing  the  inventions,  or  some  of 
J  them,  described  and  claimed  in  said  Letters  Patent  Nos. 

hi  578185,  580749,  580953,  588910,  G73329,  G73992,  707934, 

t,{  722382,  744251,  770937,  771280,  7S5205,  and  785237,  or  in 

letters  patent  herenfter  acquired  or  controlled  by  the  Licensor, 
or  of  using  the  same  in  such  machines  so  licensed ;  nnd  will  not 
use  the  same  for  the  purpose  of  giving  exhibitions  thereof  for 
profit,  directly  or  indirectly;  it  being  expressly  understood 
nnd  agreed  by  and  between  the  Licensor  and  Licensee,  how¬ 
ever,  that  the  Licensee  shall  be  at  liberty  to  give  exhibitions 
of  such  positive  motion  pictures  without  profit,  directly  or 
indirectly,  and  to  possible  or  prospective  lessees  or  pur¬ 
chases  thereof;  and  the  Licensee  further  covenants  and 
agrees  not  to  knowingly  allow  positive  motion  pictures,  on 
film  'of-'a  greater  width  than  approximately  one  (1)  inch, 
manufactured  by  the  Licensee  under  this  agreement,  to  be 
leased  for  use  with  any  exhibiting  or  projecting  machine  not 
licensed  by  the  Licensor  under  the  letters  patent  mentioned 
in  this  paragraph,  and  that  it  may  hereafter  acquire  or  control, 
or  one  dr  more  of  them,  except  by  and  with  the  consent  of  the 
Licensor;  and  also  to  refrain  from  supplying ;  such  motion 
pictures  manufactured '  or  imported  under  this  agreement, 
for  use  with  any  exhibiting  or  projecting  machine  the 


TO  ORIGINAL  PETITION,  EXHIBIT  3. 

license  for  which,  under  the  aforesaid  letters  patent,  or  one 
or  more  of  them,  has  been  terminated,  and  the  Licensee  has 
been  notified  thereof  by  the  Licensor;  and  also  to  refrain 
from  supplying  such  motion  pictures  manufactured  and  im¬ 
ported  under  this  agreement  to  any  lessee  who  may  sublet 
such  motion  pictures  to  persons,  Arms,  or  corporations  using 
the  same  for  giving  exhibitions  thereof  in  exhibiting  or 
projecting  machines  not  licensed  by  the  Licensor  as  afore¬ 
said,  or  the  license  for  which  has  been  terminated  and  the 
Licensee  has  been  notified  by  the  Licensor  that  any  such 
lessee  continues  to  so  sublet  such  motion  pictures  after  being 
notified  by  the  Licensor  not  to  do  so;  and  the  Licensor 
covenants  and  agrees  to  promptly  notify  any  such  lessee 
who  may  so  sublet  such  motion  pictures,  after  it  has  knowl¬ 
edge  of  any  such  subletting,  and  to  notify  the  Licensee  and 
the  additional  licensees  hereafter  provided  for,  or  such  of 
them  os  may  at  the  time  be  licensees,  of  the  termination  of 
any  license  for  the  use  of  any  exhibiting  or  projecting  ma¬ 
chines  under  the  aforesaid  letters  patent,  or  any  of  them,  and 
of  any  such  lessee  who  may  so  sublet  such  motion  pictures, 
after  being  notified  by  it  not  to  do  so,  nnd  to  compel  nil  such 
additional  licensees  to  refrain  from  supplying  motion  pic¬ 
tures  for  use  with  any  such  exhibiting  or  projecting  machine 
the  license  for  which  lias  been  so  terminated,  or  to  any  such 
lessee. 

19.  The  Licensor  and  Licensee  further  mutually  covenant 
and  agree  that  the  Licensor  shall  and  will,  during  the  con¬ 
tinuance  of  this  agreement,  promptly  institute  suits  against 
any  and  all  infringers  of  the  letters  patent,  or  any  of  them, 
mentioned  in  this  agreement,  on  the  request  of  a  majority  of 
the  licensees,  including  the  Licensee  and  the  several  additional 
licensees  hereinafter  provided  for,  or  such  of  them  as  may 
at  the  time  be  licensees,  nnd  will  thereafter  diligently  prose¬ 
cute  any  such  suit  or  suits  to  final  hearing  and  decision; 
all  expense  connected  with  the  institution  and  prosecution 
of  such  suit  or  suits  to  be  borne  by  the  Licensor,  who  shall 
also  be  entitled  to  receive  and  apply  to  its  own  use  'all 
recoveries  had  therein  for  damages  nnd  profits. 


ORIGINAL  PETITION,  EXHIBIT  3.  71 

The  Licensor  and  Licensee  further  mutually  covenant 
and  agree  that  if  in  case  any  such  suit  is  brought  upon  said 
reissued  Letters  Patent  Nos.  12037,  12192,  or  said  Letters 
Patent  Nos.  58G953  or  722382,  either  of  the  claims  of  said 
reissued  Letters  Patent  No.  12192  or  either  of  the  first,  sec¬ 
ond,  or  third  claims  of  said  reissued  Letters  Patent  No. 
12037,  or  any  of  the  claims  in  issue  in  any  such  suit  upon  said 
Letters  Patent  Nos.  580953  or  722382,  is  or  are  held  invalid 
by  a  court  that  last  hears  and  decides  such  suit,  or  should 
be  held  by  such  court  not  to  be  infringed,  then,  and  in  any 
such  case,  the  Licensee  may  at  once  terminate  this  agreement 
and  the  license  thereby  granted,  by  giving  notice  of  its  elec¬ 
tion  so  to  do  to  the  Licensor. 

The  Licensor  and  Licensee  further  mutually  covenant  and 
agree  that  the  Licensor  may,  at  its  own  expense  (except  as 
hereinafter  provided),  during  the  continuance  of  this  agree¬ 
ment,  institute  and  prosecute  suits  against  any  of  the  several 
additional  licensees  hereinafter  provided  for,  for  any  breach 
or  violation  on  the  part  of  any  such  licensee  of  the  covenants 
respecting  prices  at  which  positive  motion  pictures  shall  be 
leased  in  the  '‘lease  territory  aforesaid,”  and  also  for  viola¬ 
tion  of  any  of  the  other  terms,  conditions,  or  stipulations 
entered  into  by  such  licensee;  that  the  Licensor  shall  at  the 
end  of  each  year,  counting  from  the  day  and  year  first  above 
written,  render  to  the  Licensee  and  the  other  licensees  here¬ 
inafter  provided  for,  or  such  of  them  as  may  at  the.  time  he 
licensees,  a  statement  in  writing  showing  in  detail  all  legal 
expenses  incurred  by  it  during  such  year  in  the  prosecution 
of  such  suit  or  suits;  and  that  up  to,  but  not  exceeding,  the 
sum  of  twenty  thousand  dollars  ($20,000)  for  any  such  year, 
all  such  legal  expenses,  in  so  far  as  they  may  bo  reasonable 
and  proper,  shall  be  borne  and  paid  by  the  Licensee  nnd  the 
several  additional  licensees  hereinafter  provided  for,  pro  rata 
according  to  the  number  of  thousand  running  ,  feet  of  new 
subjects,  offered  for  lease  by  each  relatively  to  the  total  num¬ 
ber  of  thousand  running  feet  of  new  subjects,  on  film  of  a 
greater  width  than  approximately  one  (1)  inch,  offered  for 
lease  or  sale  by.  all  in  the  “territory  aforesaid,”  during  the 
year  preceding  the  rendition  of  such  statement,  nny  legal 
65498-12 - 10 


72 


ORIGINAL  PETITION,  MX  III  HIT  3. 

expenses  in  excess  of  said  twenty  thousand  dollars  (§20,000) 
during  any  such  year  to  be  borne  and  paid  by  the  Licensor 
unless  the  Licensor  and  the  Licensee  and  the  several  addi¬ 
tional  licensees  hereinafter  provided  for  should  hereafter 
mutually  agree  otherwise. 

20.  It  is  mutually  covenanted  and  agreed  by  and  between 
the  Licensor  and  Licensee  that  the  Licensor  may  grant  other 
licenses  under  said  reissued  Letters  Patent  Nos.  12037  and 
12192  and  said  Letters  Patent  Nos.  029063  and  707934,  so 
far  as  the  use  of  the  inventions  thereof  in  cameras  is  con¬ 
cerned,  said  licenses  to  be  in  writing  and  not  to  exceed  nine 
in  number,  seven  to  be  to  the  persons  and  corporations  men¬ 
tioned  in  paragraph  c  as  having  license  agreements  with  the 
Edison  Company,  one  to  the  Edison  Company,  and  one  to 
George  Kleine,  of  Chicago,  Illinois  (except  by  a  majority  vote 
of  the  Licensee  and  the  nine  other  licensees,  or  such  of  them 
as  may  at  the  time  be  licensees,  on  the  basis  of  one  vote  for 
each  thousand  running  feet  of  new  subjects,  on  film  of  a 
greater  width  than  approximately  one  (1)  inch,  offered  for 
lease  or  sale  in  the  “territory  aforesaid”  by  bucIi  licensees 
during  the  year  preceding  the  taking  of  such  vote),  and  not 
to  he  granted  or  continued  upon  terms,  conditions,  or  stipula¬ 
tions  which  are  in  any  respect  more  favorable  to  the  licensees 
named  therein  than  those  set  forth  in  this  agreement  (except 
to  the  Edison  Company,  and  it  shall  only  be  more  fnvornble 
to  it  in  the  matter  of  the  payment  of  royalties  to  the  Licensor), 
and  in  the  case  of  the  license  to  George  Kleine  it  shall  be  so 
restricted  ns  to  prohibit  said  Kleine  from  manufacturing  neg¬ 
ative  motion  pictures  in  “the  territory  aforesaid,”  and  from 
manufacturing  from  imported  negative  motion  pictures  posi¬ 
tive  motion  pictures,  and  importing  positive  motion  pictures 
in  all  more  than  three  thousand  "running  feet  of  new  sub¬ 
jects”  per  week:  Provided,  however,  That  if  anv  of  such  addi¬ 
tional  nine  licenses  should  be  terminated  during  the  contin¬ 
uance  of  this  agreement,  then  nnd  in  each  such  case  the 
Licensor  may  grant  a  license  in  writing  to  some  other  motion- 
picture  manufacturer,  hut  not  on  terms,  conditions,  or  stipu¬ 
lations  which  nre  more  favorable  ns  to  such  new  licensee  than 
those  set  forth  in  this  agreement. 


ORIGINAL  PETITION,  EXHIBIT  3.  73 

It  is  further  mutually  covenanted  and  agreed  by  and 
between  the  Licensor  and  the  Licensee  that  the  Licensor 
will,  during  the  continuance  of  this  agreement,  license  such 
a  number  of  persons,  firms,  or  corporations  under  said 
Letters  Patent  Nos.  5781S5,  5S0749,  586953,  588916,  673329, 
673992,  707934,  7723S2,  744251,  770937,  771280,  785205, 
and  785237,  to  make  and  sell  exhibiting  or  projecting  ma¬ 
chines  containing  the  inventions  described  and  claimed  in 
the  same,  capable  of  exhibiting  or  projecting  motion  pictures 
on  film  of  a  width  greater  than  approximately  one  (1)  inch, 
and  also  such  machines  not  capable  of  exhibiting  or  project¬ 
ing  motion  pictures  on  film  of  a  greater  width  than  approx¬ 
imately  one  (1)  inch,  ns  will  he  able  to  supply  the  demand 
for  the  same;  and  that  it  shall  not,  and  it  hereby  covenants 
and  agrees  that  it  will  not,  during  the  continuance  of  this 
agreement,  license  any  person,  firm,  or  corporation  under  said 
letters  patent  dr  any  of  them  to  make  or  sell  any  sncli 
exhibiting  or  projecting  machine  containing  any  of  the 
inventions  described  and  claimed  in  said  letters  patent,  and 
capable  of  exhibiting  or  projecting  motion  pictures  on  film 
of  a  width  greater  than  approximately  one  (1)  inch,  except 
upon  the  conditions  and  restrictions  that  the  sale  and  pur¬ 
chase  of  such  machine  gives  only  the  right  to  use  it  solely 
for  exhibiting  or  projecting  motion  pictures  containing  the 
inventions  of  said  reissued  Letters  Patent  No.  12192  leased 
by  a  licensee  of  the  Licensor,  while  it  owns  or  controls  the 
letters  patent  under  which  such  machine  is  licensed  and 
upon  other  terms  to  be  fixed  by  the  Licensor  while  in  use, 
and  while  the  letters'  patent  under  which  it  is  licensed  are 
owned  or  controlled  by'  the  Licensor  (which  other  terms  shall 
only  be  the  payment  of  a  royalty  or  rental  to  the  Licensor 
while' in  use,  as  hereinbefore  provided  for),  nnd  that  there 
shall  be  attached  to  each  such  machine,  in  a  conspicuous 
place,  a  plate,  which  is  not  to  be  removed  therefrom;  showing 
plainly  not  only  the  dates  of  the  letters  patent  under  wliich 
it  is  licensed,  but  also  the  aforesaid ’conditions' or' restriction’s. 

The  Licensor  further  covenants  and  agrees  that  it  will 
not  charge  any  such  person,  firm,  or  corporation  manu¬ 
facturing  and  selling  any  such  machine  capable  of  exhibit- 


1 4  ORIGINAL  PETITION,  EXHIBIT  3. 

ing  or  projecting  motion  pictures  on  a  film  of  a  width  greater 
than  approximately  one  (X)  inch,  more  than  five  dollars 
(?5)  as  a  license  fee  for  the  sale  of  each  such  exhibiting 
or  projecting  machine  sold  by  any  such  person,  firm,  or 
.  corporation. 

The  Licensor  further  covenants  and  agrees  that  it  will  not 
license  any  person,  firm,  or  corporation  to  make  or  sell 
any  exhibiting  or  projecting  machine  containing  any  of  the 
inventions  described  and  claimed  in  the  aforesaid  letters 
patent  which  is  not  capable  of  exhibiting  or  projecting 
motion  pictures  on  film  of  a  width  greater  than  approxb 
inately  one  (1)  inch,  except  upon  the  conditions  and  restric¬ 
tions  that  such  machine  bo  used  solely  for  exhibiting  or 
projecting  motion  pictures  on  film  not  wider  than  approxi¬ 
mately  one  (1)  inch,  in  places  where  no  admission  fee  is 
charged,  and  that  there  shall  be  attached  to  each  such 
machine  in  a  conspicuous  place,  a  plate,  which  is  not  to  be 
removed  therefrom,  showing  plainly,  not  Duly  the  dates  .of 
the  letters  patent  under  which  it  is  licensed,  but  also  the 
aforesaid  conditions  or  restrictions,  and  that  the  Licensor 
will  not  charge  to  any  person,  firm,  or  corporation  making 
or  selling  any  such  machine  a  license  fee  of  more  than  5  per 
cent  of  the  net  retail  selling  price  of  each  such  machine. 

The  Licensor  further  covenants  and  agrees  that  it  will  grant 
a  license  to  the  Licensee,  upon  its  request,  to  manufacture 
and  sell  exhibiting  or  projecting  machines  under  the  letters 
patent,  and  upon  the  condition  as  to  the  payment  of  the 
license  fees  or  royalties  and  the  other  conditions  and  restric- 
tions,  as  provided  for  in  this  paragraph,  and  will  also  grant 
similar  licenses  upon  the  same  conditions  as  to  the  payment 
of  the  license  fees  or  royalties  and  the  other  conditions  and 
restrictions,  to  such  of  the  additional  licensees  hereinbefore 
provided  for  who  may  request  the  same,  except  that  the  said 
American  Mu toscope  &  Biograph  Company  is  not  to  pav  any 
such  license  fees  or  royalties ;  and  will  also  grant  a  license  to  the 
Licensee  and  any  such  additional  licensees  who  mav  request 

imder™  ^  °r  Projecting  machines 

under  any  other  letters  patent  and  containing  the  inventions 
described  and  claimed  therein  that  the  Licensor  may  here- 


ORIGINAL  PETITION,  EXHIBIT  3. 


75 


after  acquire  or  control,  upon  the  payment  of  additional 
license  fees  or  royalties  to  be  fixed  by  the  Licensor,  and  sub¬ 
ject  to  similar  conditions  and  restrictions  and  the  placing 
upon  the  machines  of  plates  containing  such  conditions  and 
restrictions  as  are  provided  for  in  this  paragraph  respecting 
exhibiting  or  projecting  machines  made  and  sold  under  the 
letters  patent  now  owned  by  the  Licensor  mentioned  in  this 
paragraph,  the  royalty  or  license  fee,  and  all  other  conditions 
and  restrictions  of  such  last-named  licenses  to  be  the  same 
for  the  Licensee  and  such  other  licensees. 

It  is  mutually  covenanted  and  agreed,  however,  by  and 
between  the  Licensor  and  Licensee  that  the  Licensor  shall 
linve  the  right  to  grant,  and  that  it  will  grant,  licenses  to 
persons,  firms,  and  corporations  upon  their  request  (includ¬ 
ing  the  Licensee)  to  manufacture  and  sell  exhibiting  or  pro¬ 
jecting  machines  containing  the  inventions  described  and 
claimed  in  the  aforesaid  letters  patent  now  owned  by  the 
Licensor,  capable  of  exhibiting  or  projecting,  by  reflected 
light,  animated  pictures  on  film  of  any  width,  but  not 
capable  of  exhibiting  or  projecting  the  same  by  transmitted 
light,  upon  the  payment  of  a  royalty  or  license  fee  hot  to 
exceed  5  per  cent  of  the  net  retail  selling  price  of  each  such 
machine,  and  upon  the  condition  that  they  be  used  only  in 
places  where  no  admission  fee  is  charged,  which  condition 
shall  appear  on  a  plate  to  be  attached  to  each  such  machine; 
and  also  that  it  will  grant  licenses  to  such  persons,  firms,  and 
corporations  to  manufacture  and  sell  such  exhibiting  or  pro¬ 
jecting  machines  containing  the  inventions  described  and 
claimed  in  any  letters  patent  that  the  Licensor'  may  here¬ 
after  own  or  control,  subject  to  similar  conditions  or  restric-  . 
tions  and' upon  the  payment  of  additional  license  fees  or 
royalties  to  be  fixed  by  the  Licensor;  the  royalty  or  license 
fee,  and  all  the  conditions  and  restrictions  of  all  such  licenses, 
to  be  the  same  for  the  Licensee  and  such  other  licensees, 

20n.  It  is  further  mutually  covenanted  and  agreed  by 
and  between  the  Licensor  and  Licensee  that  in  case'  the 
Licensor  should  be  notified  by  the  Licensee  or  it  should 
otherwise  come  to  its  knowledge  that  any  sucli  additional 


76  ORIGINAL  PETITION,  EXHIBIT  3. 

Licensee  has  knowingly  or  through  gross  neglect  or  careless¬ 
ness  broken,  violated,  or  failed  to  perforin  any  of  the  terms, 
conditions,  or  stipulations  of  the  license  granted  by  the 
Licensor,  resulting  in  substantial  injury  to  the  Licensor,  or 
the  Licensee  or  the  additional  Licensees  aforesaid,  the  Licen¬ 
sor  will  promptly  notify  such  Licensee  in  writing  of  such 
breach,  violation,  or  nonperformance,  and  if  such  Licensee 
should,  for  a  period  of  forty  (40)  days  after  such  notice, 
persist  in  or  fail  to  correct,  repair,  or  remedy  the  same,  the 
Licensor  shall  at  once  terminate  the  license  to  such  Licensee; 
and  that  in  case  any  such  Licensee  should  be  guilty  of  a 
second  grossly  neglectful,  careless,  or  knowing  breach, 
violation,  or  nonperformance  of  such  terms,  conditions,  or 
stipulations,  resulting  in  substantial  injury  to  the  Licensor, 
or  the  Licensee  or  the  additional  Licensees  aforesaid,  then, 
and  in  such  case,  the  Licensor  shall  terminate  the  license 
to  such  Licensee  by  giving  the  latter  thirty  (30)  days’  notice 
in  writing  of  its  intention  so  to  do. 

206.  The  Licensor  and  Licensee  further  mutually  covenant 
and  agree  that  by  the  expression  “motion  pictures,”  as 
used  in  the  foregoing  agreement,  is  meant  transparent  or 
translucent  tape-like  film  having  photographs  thereon  of 
objects  in  motion. 

21.  It  is  further  mutually  covenanted  and  agreed  by  and 
between  the  Licensor  and  Licensee  that  unless  sooner 
terminated,  as  hereinbefore  or  hereinafter  •provided,  this 
agreement  and  the  license  granted  thereby  shall  take  effect 
January  1,  1909,  and  shall  continue  until  June  20,  1910,  but 
that  the  Licensee  may  renew  this  agreement  and  license 
thereafter  from  year  to  year  upon  the  same  terms,  condi¬ 
tions,  and  stipulations  as  herein  provided,  by  giving  notice 
to  the  Licensor  on  or  before  April  20  of  each  year,  beginning 
with  the  year  1910,  of  the  Licensee’s  election  to  so  renew 
this  agreement  and  license,  and  upon  the  giving  of  each 
such  notice  this  agreement  and  the  license  thereby  granted 
shall  be  considered  and  treated  by  the  Licensor  and  Licensee 
as  renewed  for  a  period  of  one  year,  beginning  June  20  of 
the  year  following  such  notice,  except  that  the  last  renewal 


OniGINAL  PETITION,  EXHIBIT  3.  77 

period  shall  be  for  the  period  from  June  20,  1914,  to  August 
2G,  1919,  the  date  of  expiration  of  the  Letters  Patent  No. 
707934. 

It  is  further  mutually  covenanted  and  agreed  by  and 
between  the  Licensor  and  Licensee  that  if,  during  said  original 
term  or  during  any  such  renewal  period,  either  party  should, 

■  knowingly  or  through  gross  neglect  or  carelessness,  be  guilty 

of  a  breach,  violation,  or  nonperformance  of  its  covenants, 
$,  conditions,  and  stipulations,  resulting  in  substantial,  injury 

:J  to  the  other  party,  and  should,  for  the  period  of  forty  (40) 

;  flays  after  notice  thereof  from  the  other  party,  persist  therein 

%.  or  fail  to  correct,  repair,  or  remedy  the  same,  then  and  in  such 

3|  case  the  party  aggrieved  may  terminate  this  agreement  by 

|  giving  notice  in  writing  to  the  guilty  party  of  its  intention 

:;'i.  so  t0  do.  It  is,  however,  mutually  covenanted  and  agreed 

I  by  and  between  the  Licensor  and  Licensee,  that  if  the  guilty 

H  party  should  correct,  repair,  or  remedy  such  breach,  violation, 

:  or  nonperformance  of  its  covenants,  conditions,  and  stipula- 

|  tions  within  the  said  period  of  forty  (40)  days  after  such 

§  notice,  and  should  thereafter  knowingly  or  through  gross 

h  neglect  or  carelessness  be  guilty  of  a  second  breach,  violation, 

<1  or  nonperformance  of  its  covenants,  conditions,  and  stipula¬ 

tions,  resulting  in  substantial  injury  to  the  other  party,  then 
and  in  such  case,  the  party  aggrieved  may  terminate  this 
J  agreement  by  giving  thirty  (30)  days’  notice  in  writing  to  the 

guilty  party  of  its  intention  so  to  do.  Such  termination  of 
I  the  agreement,  however,  shall  not  prejudice  cither  party 

\  hereto  in  the  recovery  of  damages  because  of  any  such  breach, 

|  violation,  or  nonperformance  by  the  other  party  hereto, 

f  22.  All  notices  provided  for  in  this  agreement  shall  be  in 

writing  and  shall  be  given  by  delivering  the  same  to  the 
Licensor  or  Licensee,  ns  the  case  may  be,  or  to  an  officer  of 
the  Licensor  or  Licensee,  ns  the  case  may  be,  or  by  depositing 
such  notice,  postage  prepaid,  in  any  post  office  of  the  United 
States,  in  a.  sealed  envelope  directed  to  the  Licensor  or  the 
Licensee,  as  the  case  may  be,  at  its  last  known  post-office 
address,  to  be  forwarded  by  registered  mail. 

23.  It  is  mutually  covenanted  and  agreed  by  and  between 
the  Licensor  and  Licensee  that  after  notice  of  the  termination 


78  ORIGINAL  PETITION,  EXHIBIT  3. 

of  this  agreement  and  the  license  granted  thereby  by  either 
party,  as  provided  for  in  paragraphs  19  and  21  of  this  agree¬ 
ment,  and  after  the  same  have  been  terminated,  no  matter 
wlmt  the  cause  or  manner  of  termination  may  be,  neither 
this  license  agreement,  nor  the  fact  that  the  Licensee  has 
entered  into  or  acted  under  it,  shall  be  used  in  any  manner, 
directly  or  indirectly,  by  or  for  the  Licensor,  its  successors, 
assigns,  or  legal  representatives,  or  by  or  for  others  with  its 
or  their  consent  or  permission,  against  the  Licensee,  or  the 
Licensee’s  successors  or  legal  representatives,  in  any  litiga¬ 
tion,  controversy,  or  proceeding  involving  the  Licensee  or 
them  or  any  other  persons,  Arms,  or  corporations,  or  in  any 
other  way,  it  being  understood  and  agreed  that  upon  such 
termination  the  positions  and  rights  of  the  Licensor  and 
Licensee  shall  he  the  same  as  if  this  agreement  had  not  been 
made;  provided,  however,  that  the  rights  of  neither  party 
shall  be  prejudiced  by  such  termination  in  the  recovery  of 
damages  for  any  breach  or  other  violation  of  this  agreement 
by  the  other  occurring  prior  to  such  termination. 

In  witness  whereof  the  parties  hereto  have  caused  this 
agreement  to  be  executed  by  their  officers  duly  authorized 
to  perform  these  acts,  the  day  and  year  first  above'written. 

[seal.]  Motion  Picture  Patent  Company, 

By  Prank  L.  Dyer,  President. 


— Attest: 

GrEonaE  P.  Scull,  Secretary. 


[seal.]  American  Mutoscope  and  Biograph  Company, 
By  J.  J.  Kennedy,  President. 

Attest : 

W.  H.  BRUENNEn,  Secretary. 


Exhibit  4. 

Form  of  License  Agreement  Between  motion 
Picture  Patents  Company  and  the  Rental 
Exchanges. 

EXCHANGE  LICENSE  AGREEMENT. 

Whereas  the  Motion  Picture  Patents  Company,  of  New 
York  City  (hereinafter  referred  to  as  the  “Licensor”)  is  the 
owner  of  all  the  right,  title,  and  interest  in  and  to  reissued 
Letters  Patent  No.  12192,  dated  January  12,  1904,  granted  to 
Thomas  A.  Edison  for  kinetoscopic  film,  and  also  Letters 
Patent  Nos.  578185,  680749,  58G953,  588916,  G73329,  673992, 
707934,  722382,  744251,  770037,  771280,  785205,  and  785237, 
for  inventions  relating  to  motion  picture  projecting  machines; 
and 

Whereas  the  Licensor  has  licensed  the  American  Muto¬ 
scope  and  Biograph  Company,  of  New  York  City;  the  Edison 
Manufacturing  Company,  of  Orange,  New  Jersey;  the  Essa- 
nay  Company,  of  Chicago;  the  Kalem  Company,  of  New  York 
City;  George  Kleine,  of  Chicago;  Lubin  Manufacturing  Com¬ 
pany,  of  Philadelphia;  Pathe  Preres,  of  New  York  City;  the 
Selig  Polyscope  Company,  of  Chicago;  and  the  Vitagraph 
Company  of  America,  of  New  York  City  (hereinafter  referred 
to  as  "Licensed  Manufacturers  or  Importers”),  to  manufac¬ 
ture  or  import  motion  pictures  under  said  reissued  letters 
patent  and  to  lease  licensed  motion  pictures  (hereinafter 
referred  to  as  “Licensed  Motion  Pictures”)  for  use  on  pro¬ 
jecting  machines  licensed  by  the  Licensor;  and 

Whereas  the  undersigned  (hereinafter  referred '  to  as  the 
“Licensee”),  desires  to  obtain  a  license  under  said  reissued 
Letters  Patent  No.  12192,  to  lease  from  the  Licensed  Manu¬ 
facturers  and  Importers  licensed  motion  pictures  and  to  sublet 
the  said  licensed  motion  pictures  for  use  on  projecting 
machines  licensed  by  the  Licensor; 

55498-12  —11  79 


— -  • - 1 


ORIGINAL  PETITION,  EXHIBIT  4. 


ORIGINAL  PETITION,  EXHIBIT  4. 


Now,  therefore,  the  parties  hereto,  in  consideration  of 
the  covenants  herein,  have  agreed  as  follows: 

(1)  The  Licensor  hereby  grants  to  the  Licensee  for  the 
term  and  subject  to  the  conditions  expressed  in  the  "Con¬ 
ditions  of  license”  hereinafter  set  forth,  the  license,  under 
the  said  reissued  Letters  Patent  No.  12192,  to  lease  licensed 
motion  pictures  from  the  Licensed  Manufacturers  and 
Importers  and  to  sublease  said  license  motion  pictures 
for  use  only  on  projecting  machines  licensed  by  the  Licensor 
under  letters  patent  owned  by  it. 

(2)  The  Licensee  covenants  and  agrees  to  conform  with 
and  strictly  adhere  to  and  be  bound  by  all  of  the  “Condi¬ 
tions  of  license,”  hereinafter  set  forth,  and  to  and  by  any  and' 
all  future  changes  in  or  additions  thereto,  and  further  agrees 
not  to  do  or  suffer  any  of  the  acts  or  things  thereby  pro¬ 
hibited,  and  that  the  Licensor  may  place  and  publish  the 
Licensee’s  name  in  its  removal  or  suspended  list  in  the  event 
of  the  termination  of  this  agreement  by  the  Licensor,  or  in 
case  of  any  violation  thereof,  and  may  direct  the  Licensed 
Manufacturers  and  Importers  not  to  lense  licensed  motion 
pictures  to  the  Licensee,  the  Licensee  hereby  expressly 
agreeing  that  such  Licensed  Manufacturers  and  Importers 
shall  have  the  right  to  cease  such  leasing  when  so  directed 
by  the  Licensor;  and  the  Licensee  further  ngrecs  that  the 
signing  of  this  agreement  constitutes  a  cancellation  of  any  or 
all  agreements  for  the  sale  of  licensed  motion  pictures  made 
prior' to  this  agreement  by  and  between  the  Licensee  and 
any  or  all  licensed  manufacturers  or  importers,  except  as 
to  any  clause  in  said  agreements  relating  to  the  return  of 
motion-picture  film  to  the  several  licensed  manufacturers 
or  importers.  It  is  further  understood  nnd  agreed  by.  the 
Licensee  that  the  license  hereby  granted  is  a  personal  one 
and  not  transferable  or  assignable,  and  the  Licensee  hereby 
recognises  and  acknowledges  the  validity  of  the  said  reissued 
Letters  Patent  No.  12192. 


;  CONDITIONS  OF  LIOENSE. 

1.  Prom  the  date  of  this  agreement  the  Licensee  shall  not 
buy,  lease,  rent,  or  otherwise  obtain  any  motion  pictures 
other  than  licensed  motion  pictures  and  shall  dispose  of  any 
motion  pictures  only  by  the  subleasing  thereof  under  the 
conditions  hereinafter  set  forth. 

i  2.  The  ownership  of  each  licensed  motion  picture  leased 

under  this  agreement  shall  remain  in  the  Licensed  Manu- 
Vj  facturcr  or  Importer  from  whom  it  may  have  been  leased, 

■;'[  the  Licensee,  by  the  payment  of  the  leasing  price  acquiring 

only  the  license  to  sublet  such  motion  picture  subject  to  the 
Srf  conditions  of  this  agreement.  Such  license  for  any  motion 

i S  picture  shall  terminate  upon  the  breach  of  this  agreement 

<1  in  regard  thereto,  and  the  Licensed  Manufacturer  or  Importer 

■;?*  from  whom  it  may  have  been  leased  shall  have  the  right  to 

:.i  immediate  possession  of  such  motion  picture,  without 

•%j  liability  for  any  leasing  price  or  other  sum  which  the  Licensee 

or  the  person  in  whose  possession  said  motion  picture  is  found 
Op  may  have  paid  therefor. 

3.  The  Licensee  shall  not  sell  nor  exhibit  licensed  motion 
pictures  obtained  from  any  Licensed  Manufacturer  or 
- !-  Importer,  either  in  the  United  States  or  elsewhere,  but  shall 

;;  only  sublet  such  licensed  motion  pictures  and  only  for  use 
in  the  United  States  and  its  Territories  and  only  to  exhibitors 
who  shall  exclusively  exhibit  licensed  motion  pictures,  but 
J  in  no  case  shall  the  exhibitor  be  permitted  to  sell  or  sublet 

■  or  otherwise  dispose  of  said  licensed  motion  pictures, 

j  4.  The  lensing  price  to  be  pnid  by  the  Licensee  to  the 

Vi  Licensed  Manufacturers  or  Importers,  or  the  terms  of  pny- 

£  ment  for  or  shipment  of  licensed  motion  pictures,  shall  in  no 

case  be  less  or  more  favorable  to  the  Licensee  than  that 
i;j  defined  in  the  leasing  schedule  embodied  in  this  agreement, 

or  any  other  substitute  leasing  schedule,  which  may  be 
regularly  adopted  by  the  Licensor,  and  of  which  notice  shnll 
J  be  given  to  the  Licensee  hereafter. 

(|  5.  To  permit  the  Licensee  to  take  advantage  of  any 

j  standing  order  lensing  price  mentioned  in  such  schedule, 

I  such  standing  order  with  any  Licensed  Manufacturer  or 


S2  ORIGINAL  PETITION,  EXHIBIT  4. 

Importer  sliall  be  for  one  or  more  prints  of  each  and  every  | 

subject  regularly  produced,  and  offered  for  lease  by  such  :.j 

manufacturer  or  importer  as  a  standing  order  subject  and 
not  advertised  as  special  by  such  Licensed  Manufacturer  or  :j 

Importer;  and  shall  remain  in  force  for  not  less  than  fourteen  vj 

(14)  consecutive  days.  Any  standing  order  may  be  canceled  fj 

or  reduced  by  the  Licensee  on  fourteen  (14)  days’  notice.  S; 

Extra  prints  in  addition  to  a  standing  order  shall  be  furnished  !  j 

to  the  Licensee  at  the  standing  order  leasing  price.  .» 

G.  The  Licensee  shall  not  sell,  rent,  or  otherwise  dispose  of,  ,! 

either  directly  or  indirectly,  any  licensed  motion  pictures  j] 

(however  the  same  shall  have  been  obtained)  to  any  persons,  > 

firms  or  corporations  or  agents  thereof,  who  may  be  engaged  [ 

cither  directly  or  indirectly  in  selling  or  renting  motion  ; 

picture  films.  : 

7.  The  Licensee  shall  not  make  or  cause  to  he  made,  or  i 

permit  others  to  make,  reproductions  or  so-called  “dupes”  j 

of  any  licensed  motion  pictures,  nor  sell,  rent,  loan,  or  other-  ; 

wise  dispose  of  or  deal  in  any  reproductions  or  “dupes”  of 

any  motion  pictures. 

8.  The  Licensee  shall  not  deliberately  remove  the  trade¬ 
mark  or  trade  name  or  title  from  any  licensed  motion 
picture,  nor  permit  others  to  do  so,  but  in  case  any  title  is 
made  by  the  Licensee,  the  manufacturer’s  name  is  to  bo 

placed  thereon,  provided  that  in  making  any  title  by  the  j 

Licensee  the  manufacturer’s  trade-mark  shall  not  be  repro¬ 
duced. 

0.  The  Licensee  shall  return  to  each  licensed  manufacturer 
or  importer  (without  receiving  any  payment  therefor,  except 
that  the  said  Licensed  Manufacturer  or  Importer  shall  pay  the 
transportation  charges  incident  to  the  return  of  the  same)  on 
the  first  day  of  every  month  commencing  seven  months  from 
the  first  day  of  the  month  on  which  this  agreement  is  exe¬ 
cuted,  an  equivalent  amount  of  positive  motion-picture  film 
in  running  feet  (not  purchased  or  leased  over  twelve  months 
before)  and  of  the  make  of  the  said  Licensed  Manufacturer 
or  Importer,  equal  to  the  amount  of  licensed  motion  pictures 
that  was  so  leased  during  the  seventh  month  preceding  the  day 
of  each  such  return,  with  the  exception,  however,  that  where 


ORIGINAL  PETITION,  EXHIBIT  4.  83 

any  such  motion  pictures  are  destroyed  or  lost  in  trans¬ 
portation  or  otherwise,  and  satisfactory  proof  is  furnished 
within  fourteen  (14)  days  after  such  destruction  or  loss, 
to  the  Licensed  Manufacturer  or  Importer  from  whom  such 
motion  picture  was  leased,  the  Licensed  Manufacturer  or 
Importer  shall  deduct  the  amount  so  destroyed  or  lost  from 
the  amount  to  be  returned. 

10.  The  Licensee  shall  not  sell,  rent,  sublet,  loan,  or  other¬ 
wise  dispose  of  any  licensed  motion  pictures  (however  the 
same  may  have  been  obtained)  to  any  person,  firm,  or  cor¬ 
poration  in  the  exhibition  business  who  may  have  violated 
any  of  the  terms  or  conditions  imposed  by  the  Licensor 
through  any  of  its  licensees  and  of  which  violation  the  present 
Licensee  may  have  had  notice. 

11.  The  Licensee  shall  not  sublease  licensed  motion  pic¬ 
tures  to  any  exhibitor  unless  a  contract  with  said  exhibitor 
(satisfactory  in  form  to  the  Licensor)  is  first  exacted,  under 
which  the  exhibitor  agrees  to  conform  to  all  the  conditions 
and  stipulations  of  the  present  agreement  applicable  to  the 
exhibitor;  and  in  the  case  of  an  exhibitor  who  may  operate 
more  than  a  single  place  of  exhibition,  a  similar  contract 
shall  be  exacted  in  connection  with. each  place  so  operated, 
and  supplied  with  licensed  motion  pictures  by  the  Licensee. 

12.  After  February  1,  1909,  the  Licensee  shall  not  sub¬ 
lease  any  licensed  motion  pictures  to  any  exhibitor  unless 
each  motion  picture  projecting  machine  on  which  the 
licensed  motion  pictures  are  to  be  used  by  such  exhibitor  is 
regularly  licensed  by  the  Motion  Picture  Patents  Company, 
and  the  license  fees  therefor  have  been  paid;  and  the 
Licensee  shall,  before  supplying  such  exhibitor  with  licensed 
motion  pictures,  mail  to  the  Motion  Picture  Patents  Com¬ 
pany,  at  its  office  in  New  York  City,  a  notice,  giving  the 
name  of  the  exhibitor,  the  name  and  location  of  the  place 
of  exhibition  (and,  if  requested  to  do  so  by  the  Licensor,  its 
seating  capacity,  hours  of  exhibition,  and  price  of  admission, 
and  the  number  and  make  of  the  licensed  projecting  machine 
or  machines),  together  with  the  date  of  the  commencement  of 
the  subleasing,  all  in  a  form  approved  by  the  Licensor.  The 
Licensee,  when  properly  notified  by  the  Licensor  that  the 


84  ORIGINAL  PETITION,  EXHIBIT  4. 

license  fees  of  any  exhibitor  for  any  projecting  machine  have 
not  been  paid,  and  that  the  license  for  such  projecting 
machine  is  terminated,  shall  immediately  cease  to  supply 
such  exhibitor  with  licensed  motion  pictures. 

13.  The  Licensee  agrees  to  order  during  each  month 
while  this  agreement  is  in  force,  for  shipment  directly  to 
the  place  of  business  of  the  Licensee  in  the  city  for  which 
this  agreement  is  signed,  licensed  motion  pictures,  the  net 
leasing  price  for  which  shall  amount  to  at  least  §2,500. 

14.  The  Licensee  shall,  on  each  Monday  during  the  con¬ 
tinuance  of  this  agreement,  make  or  mail  payment  to  each 
Licensed  Manufacturer  and  Importer  for  all  invoices  for 
licensed  motion  pictures  which  have  been  received  by  the 
Licensee  during  the  preceding  week. 

15.  This  agreement  shall  extend  only  to  the  place  of  busi¬ 
ness  for  the  subleasing  of  motion  pictures  maintained  by 
the  Licensee  in  the  city  for  which  this  agreement  is  signed, 
and  the  Licensee  agrees  not  to  establish  or  maintain  a  place 
of  business  for  the  subleasing  of  motion  pictures,  or  from 
which  motion  pictures  are  delivered  to  exhibitors,  in  any 
other  city,  unless  an  agreement  for  such  other  city,  similar 
to  the  present  agreement,  is  first  entered  into  by  and  between 
the  Licensee  and  the  Licensor. 

1G.  The  Licensor  agrees  that  before  licensing  any  person, 
firm,  or  corporation  in  the  United  States  (not  including 
its  insular Jerritorinl  possessions  and  Alaska)  to  lease  licensed 
motion  pictures  from  Licensed  Manufacturers  and  Impor¬ 
ters  and  to  sublease  such  motion  pictures  it  will  exact  from 
each  such  Licensee  an  agreement  similar  in  terms  to  the 
present  agreement,  in  order  that  all  Licensees  who  may  do 
business  with  the  Licensed  Manufacturers-  and  Importers 
will  be  plnced  in  a  position  of  exact  equality. 

10.  It  is  understood  and  specifically  covenanted  by  the 
Licensee  that  the  Licensor  may  terminate  this  agreement 
on  fourteen  (14)  days’  written  notice  to  the  Licensee  of  its 
intention  so  to  do,  and  that  if  the  Licensee  shall  fail '  to 
faithfully  keep  and  perform  the  foregoing  terms  and’  condi¬ 
tions  of  lease,  or  any  of  them,  or  shall  fail  to  pay  the  leasing 


ORIGINAL  PETITION,  EXHIBIT  4.  85 

v  price  for  any  motion  pictures  supplied  by  any  Licensed 

Manufacturer  or  Importer  when  due  and  payable,  according 
to  the  terms  of  this  agreement,  the  Licensor  shall  have  the 
right  to  place  the  Licensee’s  name  on  an  appropriate  sus¬ 
pended  list,  which  the  Licensor  may  publish  and  distribute 
to  its  other  licensees  and  to  exhibitors  and  to  the  Licensed 
■4  Manufacturers  and  Importers  and  to  direct  the  Licensed 

Manufacturers  and  Importers  not  to  lease  licensed  motion 
•;  pictures  to  the  Licensee,  and  the  exercise  of  either  or  both 

of  these  rights  by  the  Licensor  shall  not  be  construed  ns  a 
>i  termination  of  this  license,  and  the  Licensor  shall  also  have 

"i  the  right  in  such  case,  upon  appropriate  notice  to  the 

;•$  Licensee,  to  immediately  terminate  the  present  license,  if  the 

Licensor  shall  so  elect,  without  prejudice  to  the  Licensor’s 
J-j  right  to  sue  for  and  recover  any  damages  which  may  have 

;s-f  been  suffered  by  such  breach  or  noncompliance  with  the 

terms  and  conditions  hereof  by  the  Licensee,  such  breach  or 
;||  noncompliance  constituting  an  infringement  of  said  reissued 

ylj  letters  patent.  It  is  further  agreed  by  the  Licensee  that 

S  if  this  agreement  is  terminated  by  tlie'Licensor  for  nny  breach 

°f  any  condition  hereof,  the  right  to  possession  of  all  licensed 
motion  pictures  shall  revert,  twenty  days  after  notice  of 
i  such  termination,  to  the  respective  •  Licensed  Manufacturers 

V  and  Importers  from  whom  they  were  obtained  and  shall  bo 

sj  returned  to  such  Licensed  Manufacturers  or  Importers  at 

;r  once  after  the  expiration  of  that  period. 

"i  20.  It  is  understood  that  the  terms  and  conditions  of  this 

'•!  license  may  be  changed  at  the  option  of  the  Licensor  upon 

fourteen  (14)  days’  written  notice  to  the  Licensee,  but  no 
y?  such  change  shall  be  effective  and  binding  unless  duly  ratified 

'  I  by  an  officer  of  the  Licensor. 

;;  Leasino  rmers  of  Licensed  Positive  Motion  Pictures. 


Films  leased  between  two  and  four  months  after  release  date. 
Films  leased  between  four  and  six  months  nftor  release  date. . 
Films  leased  over  six  monthB  after  release  date . 


1 


80  ORIGINAL  PETITION,  EXHIBIT  4. 

A  rebate  of  10  per  cent  will  be  allowed  on  all  leases  of 
licensed  motion  pictures,  except  at  the  7-cent  and  6-ccnt 
prices,  which  are  net;  said  rebates  to  bo  due  and  payable 
between  the  1st  and  15tli  days  of  each  of  the  months  of 
March,  May,  July,  September,  November,  and  January  on 
all  films'  leased  during  the  two  months  preceding  each  said 
period,  provided  all  the  terms  and  conditions  of  this  license 
agreement  have  been  faithfully  observed. 

TERMS. 

All  shipments  are  made  f.  o.  b.  lessor’s  office  at  lessee’s 
risk.  | 

All  motion-picture  films  are  to  be  shipped  to  lessee’s  office 
only. 

The  lengths  at  which  motion-picture  films  are  listed  and 
leased  are  only  approximate. 

Motion  Picture  Patents  Company, 

By - ,  President. 

Licensee’s  signature, - . 

Place  of  business  for  which  this  license  is  granted: 

Street  and  No. - - 

City - ,  State - . 


;;  Exhibit  5. 

License  Agreement  Under  the  Exhibiting  Ma¬ 
chine  Patents,  Between  Motion  Picture 
Patents  Company  and  Armat  Moving 
Picture  Company. 

5.  (a)  This  agreement  made  this  7th  day  of  January,  1909, 

•V  by  and  between  the  Motion  Picture  Patents  Company,  a  cor- 
poration  organized  and  existing  under  the  laws  of  the  State 
3  of  New  Jersey,  and  having  an  office  at  Jersey  City,  in  said 
$  State,  party  of  the  first  part  (hereinafter  referred  to  as  the 

iSj  “Licensor”),  and  Armat  Moving  Picture  Company,  a  corpo- 

ration  organized  and  existing  under  the  laws  of  the  State  of 
West  Virginia,  and  having  an  office  at  Washington,  D.  C., 
■4  party  of  the  second  part  (hereinafter  referred  to  as  the 
M  “Licensee”) ; 

(6)  Whereas  the  Licensor  represents  that  it  is  the  owner 
Si  of  the  entire  right,  title,  and  interest  in  and  to  letters  patent 
:f  of  the  United  States : 

No.  678185,  dated  March  2,  1897,  for  vitascope, 
granted  to  Thomas  Armat; 

|  No.  580749,  dated  April  13,  1897,  for  vitascope, 

S'  granted  to  Thomas  Armat; 

No.  680953,  dated  July  20,  1897,  for  phantoscope, 
:1  granted  to  Charles  P.  Jenkins  and  Thomas  Armat; 

No.  588916,  dated  August  24,  1897,  for  kinetoscope, 

!  granted  to  Charles  M.  Campbell  as  the  assignee  of 

Willard  G-.  Steward  and  Ellis  P.  Prost;  . 

No.  673329,  dated  April  30,  1901,  for  kinetoscope, 
granted  to  the  American  Vitagraph  Company  ,  as 
the  assignee  of  Albert  E.  Smith ; 

No.  673992,  dated  May  14,  1901,  for  vitascope,  granted 
to  Thomas  Armat; 

No.  707934,  dated  August  26,  1902,  for  projecting 
kinetoscope,  granted  to  E.  &  H.  T.  Anthony  &  Co., 
as  assignees  of  Woodville  Latham ;  ■■■■.•  ,  t 

65498 — 12- — 12  87 


S8  ORIGINAL  PETITION,  EXHIBIT  5. 

No.  722382,  dated  Starcli  10,  1903,  for  animated  pic¬ 
ture  apparatus,  granted  to  American  Mutoscope  & 
Biograpli  Company  as  the  assignee  of  John  A. 

No.  744251,  dated  November  17,  1903,  for  kineto- 
scope,  granted  to  Albert  E.  Smith; 

No.  770937,  dated  September  27,  1904,  for  kineto- 
scope,  granted  the  Vitagraph  Company  of  America 

as  the  assignee  of  Albert  E.  Smith; 

No.  771280,  dated  October  4,  1904,  for  winding  reel, 
granted  Albert  E.  Smith ; 

No.  785205,  dated  March  21,  1905,  for  flame-shield  for 
kinetoscopes,  granted  the  Vitagraph  Company  of 
America  as  the  assignee  of  William  Ellwood;  and 

No.  785237,  dated  March  21,  1905,  for  film-holder  for 
kinetoscopes,  granted  the  Vitagraph  Company  of 
America  as  the  nssignee  of  Albert  E.  Smith ; 
all  of  which  said  letters  patent  relate  to  improvements  on 
the  motion-picture  art,  and  that  there  are  no  outstanding 
licenses,  shop  rights,  or  other  rights  under  said  letters 
patent,  or  either  of  them,  except  a  license  for  parlor  kineto- 
sco'pes,  granted  the  Karmata  Company,  of  Washington, 
D.  C.,  under  Letters  Patent  Nos.  578185,  580749,  58G953, 
and  673992,  and  certain  alleged  licenses  under  U.  S.  Letters 
Patent  No.  586953,  which  are  in  dispute,  claimed  to  be 
owned  by  the  Edison  Company*  and  the  American  Graplio- 
phone  Company,  of  Washington,  D.  O.,  and  S.  Lubin,  of 
Philadelphia,  Pennsylvania;  and  excepting  a  license  granted 
by  the  American  Mutoscope  &  Biograpli  Company  to  the 
firm  of  Marvin  and  Cnsler  to  manufacture  and  sell  cameras 
and  exhibiting  or  projecting  machines  under  letters  patent 
owned  by  it  (some  of  which  are  hereinbefore  referred  to)  for 
use  in  foreign  countries  only  and  excepting  Certain  licenses 
granted  by  the  Licensee  to  tlic  American  Mutoscope  &  Bio¬ 
graph  Company  under  Letters  Patent  Nos.  578185,  580749, 
580953;  588919,  and  079902,  and  by  the  American  Mnto- 
scopc  'ft  Biograpli  Company  to  the  Licensee  under  patents 
Nos.  707934  and  722382,  which  licenses  are,  however,  by 
agreement  between  said  parties,  suspended  and  are  not  to 


OltIQINAL  PETITION,  EXHIBIT  6.  89 

■1  be  acted  upon  until  the  Licensor  becomes  bankrupt,  ceases 

.■!  doing  business  or  shall  be  dissolved  voluntarily  or  other¬ 

wise,  or  its  charter  shall  be  repealed ;  and 

(c)  Whereas  the  Licensor  represents  further  that  it  is  the 
^  owner  of  the  entire  right,  title,  and  interest  in  and  to  reissued 

A  Letters  Patent  of  the  United  States  Numbered  12192,  dated 

Si  January  12,  1904,  the  original  letters  patent  of  which  were 

4  numbered  589108,  and  dated  August  31,  1S97,  nnd  that  it 

vl*  has  granted  licenses  under  the  said  reissued  letters  patent 

V#'  only  to  the  following-named  persons,  firms,  or  corporations : 
t§|  American  Mutoscope  &  Biograph  Company  of  New 

York  City; 

|3J  Edison  Manufacturing  Company  of  Orange,  N.  J.; 

Essanay  Company  of  Chicago,  Illinois; 

I  Kalem  Company  of  New  York  City; 

George  Kleine  of  Chicago,  Illinois; 

Lubin  Manufacturing  Company  of  Philadelphia,  Pa.; 
Patlie  Freres  of  New  York  City; 

Selig  Polyscope  Company  of  Chicago,  Illinois; 

The  Vitagraph  Company  of  America  of  New  York 
City; 

and  that  all  of  the  said  persons,  firms,  or  corporations  have 
covenanted  and  agreed  to  lease  only  and  not  sell  in  the 
IP  United  States,  its  Territories  and  possessions  except  its  insular 
J|§|  possessions  and  Alaska  (hereinafter  referred  to  as  the 
“lease  territory  aforesaid”),  motion  picture  films  manu- 
factored  or  imported  by  them,  of  a  width  greater  than 
sUf  approximately  one  inch  (1”),  nnd  under  the  condition  and 
restriction  that  the  snid  films  shall  be  used  only  on  exhibi¬ 
tion  or  projecting  machines  licensed  by  the  Licensor  undev 
United  States  letters  patent  owned  by  the  Licensor;  and 
(d)  Whereas  the  Licensee  is  engaged  in  . the  manufacture 
and  sale  of  motion  picture  exhibiting  and  projecting  ma- 
®j|  chines,  and  relying  upon  the  representation  of  the  Licensor 

SM  and  induced  thereby,  desires  to  obtain  from  the  Licensor  a 

eft  license  under  the  said  United  States  Letters  Patent; 

ti§|  ( e )  Now,  therefore,  the  parties  hereto,  for  and  in  .  con- 

s|||  siderntion  of  the  sum  of  one  dollar  to  each  in  hand  paid  by 


ORIGINAL  PETITION,  EXHIBIT  5. 


90 

the  other,  and  for  other  good  and  valuable  considerations, 
from  each  to  the  other  moving,  receipt  of  all  of  which  is 
hereby  acknowledged,  have  agreed  as  follows : 

(1)  The  Licensor  hereby  grants  to  the  Licensee  for  the 
term  and  subject  to  the  covenants,  conditions,  and  stipula¬ 
tions  hereinafter  expressed,  the  right  and  license  for  the 
United  States,  its  territories  and  possessions,  to  manufacture 
and  sell,  motion  picture  exhibiting  or  projecting  machines 
embodying  one  or  more  of  the  inventions  described  and 
claimed  in  the  said  United  States  Letters  Patent  Nos.  578185, 
580749,  580953,  58891G,  073329,  073992,  707934,  7223S2, 
744251,  770937,  771280,  785205,  and  785237.  The  license 
hereby  granted  is  personal  to  the  Licensee,  and  in  the  event 
of  the  permanent  discontinuance  or  retirement  from  business 
of  the  Licensee  for  a  period  of  six  consecutive  months,  the 
license  hereby  granted  shall  he  immediately  terminated. 

'  (2)  The  Licensor,  for  itself,  its  successors,  assigns,  and 
legal  representatives,  hereby  releases,  acquits,  and  dis¬ 
charges  the  Licensee  from  any  and  all  claims,  demands,  and 
liability  for  profits  and  damages  because  of  any  infringement 
by  the  Licensee  of  one  or  more  of  the  said  United  States 
Letters  Patent  Nos.  578185,  580749,  580953,  588916,  673329, 
673992,  707934,  722382,  744251,  770937,  771280,  785205,  and 
785237,  or  use  by  the  Licensee  of  the  inventions  covered 
thereby. 

(3)  The  Licensee  hereby  recognizes  and  admits  the  validity 
of  each  and  all  of  the  said  United  States  Letters  Patent  Nos. 
'  578185,  580749,  580953,  588916,  673329,  073992,  707934, 

722382,  744251,  770937,  771280,  785205,  and  785237,  and 
the  Licensee  agrees  hot  to  contest  or  question  the  same 
during  the  continuance  of  this  agreement. 

(4)  The  Licensee  covenants  and  agrees  that  on  all  motion 
picture  exhibiting  or  projecting  machines  containing  one  or 
more  of  the  inventions  described  and  claimed  in  the  said 
United  States  Letters  Patent  Nos.  673329,  744251,  770937j 
771280,  785205,  and  785237,  made  in  the  United  States,  its 
Territories  and  possessions,  by  the  Licensee,  and  sold  after 
the  license  hereby  granted  shall  take  effect  and  during  the 


ORIGINAL  PETITION,  EXHIBIT  5.  91 

continuance  of  this  agreement,  the  Licensee  will  pay  royalties 
as  follows: 

On  each  such  machine  capable  of  exhibiting  or  projecting 
by  transmitted  light,  motion  pictures  on  film  of  a  width 
greater  than  approximately  one  inch  (1"),  a  royalty  of  one 
dollar  (?1). 

On  each  such  machine  not  capable  of  exhibiting  or  pro¬ 
jecting  by  transmitted  light,  motion  pictures  on  film  of  a 
width  greater  than  approximately  one  inch  (1"),  a  royalty 
of  three-fifths  (3-5)  of  one  (1)  per  cent  of  the  net  retail 
selling  price  of  such  machines. 

On  each  such  machine  capable  of  exhibiting  or  projecting 
by  reflected  light  motion  pictures  on  film  of  any  width,  hut 
but  not  capable  of  exhibiting  or  projecting  the  same  by 
transmitted  light,  a  royalty  of  three-fifths  (3-5)  of  one  (1)  per 
cent  of  the  net  retail  selling  price  of  such  machine. 

It  is  understood  and  agreed  by  and  between  the  Licensor 
and  the  Licensee  that  the  expression  “motion  picture  exhib¬ 
iting  or  projecting  machine,”  as  used  hereinbefore  or  here¬ 
inafter,  includes  motion-picture  mechanisms  or  “heads”  for 
such  exhibiting  or  projecting  machines,  hut  not  any  repair 
parts  or  portions  of  such  motion-picture  mechanisms  or 
“heads.” 

The  Licensee  further  covenants  and  agrees  that  the 
Licensee  will,  within  fifteen  (15)  days  after  the  last  days  of 
the  months  of  November,  February,  May,  and  August  in 
each  year,  after  this  agreement  takes  effect  and  during  its 
continuance,  submit  a  statement  in  writing  signed  by  the 
proper  officer  of  the  Licensee,  and  sworn  to  if  requested  by 
the  Licensor,  showing  the  number  of  exhibiting  or  projecting 
machines  of  each  of  the  classes  provided  for  in  this  para¬ 
graph,  embodying  one  or  more  of  the  inventions  described 
and  claimed  in  the  said  United  States  Letters  Patent  Nos. 
073329,  744251,  770937,  771.280,  785205,  and  785237,  sold 
hy  the  Licensee  during  the  three  months  ending  with  the 
last  days  of  the  said  months,  and  at  the  same  time  pay  the 
royalties  due-  thereon.  The  first  such  statement  and  pay¬ 
ment,  however,  shall  he  only  for  the  period  between  Februaiy 
1,  1909,  and  February  28,  1909.  The  Licensee  further  agrees 


I  s 


ni 


92  ORIGINAL  PETITION,  EXHIBIT  5. 


to  keep  accurate  books  of  account  and  to  permit  the  Licensor 
to  determine  through  Messrs.  Price,  Waterhouse  &  Com¬ 
pany,  or  any  other  reputable  chartered  accountants  to  be 
agreed  upon  by  the  parties  hereto,  the  number  of  such 
exhibiting  or  projecting  machines  sold  by  the  Licensee  while 
this  agreement  is  in  effect,  if  the  Licensor  should  so  desire. 

(5)  The  Licensee  further  covenants  and  agrees  that  each 
and  every  motion  picture  exhibiting  or  projecting  machine 
capable  of  exhibiting  or  projecting  by  transmitted  light, 
motion  pictures  on  a  film  of  a  width  greater  than  approxi¬ 
mately  one  inch  (1"),  and  embodying  one  or  more  of  the 
inventions  described  and  claimed  in  the  said  United  States 
Letters  Patent  Nos.  578X85,  580749,  586953,  588916,  673329, 
673992,  707934,  722382,  744251,  770937,  771280,  785205’ 
and  785237  made  in  the  United  States,  its  territories  or  pos¬ 
sessions  by  the  Licensee,  shall  be  sold  by  the  Licensee, 
except  when  sold  for  export,  under  the  restriction  and 
condition  that  such  exhibiting  or  projecting  machines, 
shall  be  used  solely  for  exhibiting  or  projecting  motion 
pictures  containing  the  invention  of  reissued  Letters  Patent 
No.  12192,  leased  by  a  Licensee  of  the  Licensor  while  it 
owns  said  patents,  and  upon  other  terms  to  be  fixed  by 
the  Licensor  and  complied  with  by  the  user  while  the  said 
machine  is  in  use  and  while  the  Licensor  owns  snid  patents 
(which  other  terms  shall  only  be  the  payment  of  a  royalty 
or  rental  to  the  Licensor  while  in  use).  The  Licensor 
further  covenants  and  agrees  that  the  Licensee  will  attach 
in  a  conspicuous  place  to  each  and  every  such  exhibiting  or 
projecting  machine  of  the  Licensee’s  manufacture,  sold  by 
the  Licensee,  except  for  export,  after  the  date  hereof,  a 
plate  showing  plainly  not  only  the  dates  of  the  letters 
patent  under  which  the  said  machine  is  licensed,  but  also 
the  following  words  and  figures : 

Serial  No : 

Patented.  No. 

The  sale  and  purchase  of  this  machine  gives  only  the 
right  to  use  it  solely  with  moving  pictures  containing  the 
invention  of  reissued  patent  No.  12192,  leased  by  a  licensee 


i 

!! 


ORIGINAL  PETITION,  EXHIBIT  5.  93 

of  the  Motion  Picture  Patents  Company,  the  owner  of  the 
above  patents  and  reissued  patent,  while  it  owns  said  pat¬ 
ents,  and  upon  other  terms  to  be  fixed  by  the  Motion  Pic¬ 
ture  Patents  Company  und  complied  with  by  the  user 
while  it  is  in  use  and  while  the  Motion  Picture  Patents 
Company  owns  said  patents.  The  removal  or  defacement; 
of  this  plate  terminates  the  right  to  use  this  machine. 

(6)  The  Licensee  further  covenants  and  agrees  that  each 
and  every  motion  picture  exhibiting  or  projecting  machine 
not  capable  of  exhibiting  or  projecting  by  transmitted  light,' 
motion  pictures  on  a  film  of  a  width  greater  than  approxi¬ 
mately  one  inch  (1"),  or  capable  of  exhibiting  or  projecting 
motion  pictures  on  film  of  any  width,  but  only  with  reflected 
light,  and  embodying  one  or  more  of  the  inventions  described 
and  claimed  in  the  said  Letters  Patent  Nos.  578185,  580749, 
586953,  588916,  673329,  673992,  707934,  7223S2,  744251, 
770937,  771280,  785205,  and  785237;  and  made  in  the  United 
States,  its  Territories  and  possessions  by  the  Licensee,  shall 
be  sold  by  the  Licensee,  except  when  sold  for  export,  under  the 
restrictions  and  condition  that  the  said  exhibiting  or  project¬ 
ing  machine  shall  be  used  in  exhibiting  or  projecting  motion 
pictures  only  in  places  to  which  no  admission  fee  is  charged. 
The  Licensee  further  covenants  and  agrees  that  the  Licensee 
will  attach  in  a  conspicuous  place  to  each  and  every  such 
exhibiting  or  projecting  machine  of  the  Licensee’s  manufac¬ 
ture,  sold  by  the  Licensee,  except  for  export,  after  the  date 
hereof,  a  plate  showing  plainly  not  only  the  dates  of  the  Let¬ 
ters  Patent  under  which  the  said  machine  is  licensed,  but 
also  the  following  words  and  figures : 

Patented  No. 

The  sale  and  purchase  of  this  machine  gives  only  the  right 
to  use  it  so  long  as  this  plate  is  not  removed  or  defaced  and  in 
places  to  which  no  admission  fee  is  charged. 

(7)  The  Licensee  further  covenants  and  agrees  that  to 
each  and  every  motion-picture  exhibiting  or  projecting 
machine  of  any  kind,  embodying  one  or  more  of  the  inven¬ 
tions  described  and  claimed  in  the  said  United  States  Letters 


94  ORIGINAL  PETITION,  EXHIBIT  5. 


OIIIGINAL  PETITION,  EXHIBIT  5.  95 


Patent  Nos.  57S1S5,  580749,  5SG953,  58S91G,  073329, 

073992,  707934,  7223S2,  744251,  770937,  771280,  785205, 
and  785237,  and  made  in  tlie  United  States,  its  Territories 
and  possessions  by  the  Licensee,  when  sold  bona  fide  for 
export,  there  shall  be  attached  a  plate  showing  plainly  not 
only  the  dates  of  the  letters  patent  under  which  the  said 
machine  is  licensed,  but  also  the  following  words  and 
figures : 

Patented  No. 

Not  licensed  for  use  in  the  United  States,  its  Territories 
and  possessions  (except  its  insular  possessions  and  Alaska). 

It  is  understood  by  and  between  the  parties  hereto  that 
by  “export  sales”  is  meant  all  sales  for  delivery  outside  of 
the  “lease  territory  aforesaid,”  when  the  machine,  ad¬ 
dressed  to  the  purchaser,  agent,  or  consignee,  is  delivered 
to  the  vessel  or  to  a  transportation  company  for  transporta¬ 
tion  outside  of  the  said  “lease  territory  aforesaid,”  and  not 
otherwise. 

(8)  The  Licensee  further  covenants  and  agrees  that  the 
Licensee  will  not,  during  the  continuance  of  this  agreement, 
make  or  sell  repair  parts  for  motion-picture  exhibiting  or 
projecting  machines  which  have  been  manufactured  or 
imported  and  sold  by  any  other  person,  firm,  or  corporation, 
who  or  which  is  licensed  by  the  Licensor  to  manufacture  or 
import  and  sell  motion-picture  exhibiting  or  projecting 
machines  under  any  or  all  of  the  said  United  States  Letters 
Patent  Nos.  578185,  580749,  580953,  58891G,  073329,  073992, 
707934,  722382,  744251,  770937,  771280,  785205,  and  785237, 
when  such  repair  parts  constitute  any  part  of  any  invention 
described  and  claimed  in  the  said  United  States  letters 
patent. 

(9)  The  Licensee  further  covenants  and  ngrees  that  the 
Licensee  will  not  sell  any  exhibiting  or  projecting  mncliine 
which  the  Licensee  is  hereby  licensed  to  manufacture  at  less 
than  the  Licensee’s  list  price  for  such  machine,  except  to 
jobbers,  and  to  other  persons,  firms,  and  corporations  for  the 
purpose  of  resale,  and  that  the  Licensee  will  require  such 
jobbers  and  other  persons,  firms,  and  corporations  to  sell 


such  machines  at  not  less  than  the  Licensee’s  list  price  for 
such  machine.  Nothing  in  this  paragraph  shall  prohibit, 
however,  the  allowance  of  two  per  cent  (2%)  discount  from 
list  price  for  ten  days  cash  payments. 

(10)  The  Licensee  further  covenants  and  agrees  that  the 
Licensee  will  not  sell,  after  May  1,  1909,  during  the  continu¬ 
ance  of  this  agreement,  any  exhibiting  or  projecting  machine 
which  the  Licensee  is  hereby  licensed  to  manufacture,  capable- 
of  exhibiting  or  projecting  by  transmitted  light,  motion 
pictures  on  film  of  a  width  greater  than  approximately  pne 
inch  (1"),  at  a  less  list  price  than  one  hundred  and  fifty 
dollars  (§150),  which  list  price  may  include  the  machine 
head,  stercopticon  attachment,  film  maga7.ine,  lamp  liopse, 
arc  lamp,  rheostat,  switch  and  switch  box,  and  attaching 
cords,  except,  however,  that  for  the  last  five  named  items 
may  be  substituted  a  gas  burner  and  gas  making  outfit. 
It  is  further  understood  and  agreed  that  such  complete 
machines  may  be  sold  between  February  1,  1909,  and  May  1, 
1909,  at  a  less  list  price  than  one  hundred  and  fifty  dollars 
(§150),  but  only  to  persons,  firms,  or  corporations  not  en¬ 
gaged  in  the  business  of  renting  motion  picture  films,  and 
not  for  use  in  any  permanent  or  fixed  place  of  exhibition. 

(11)  It  is  further  mutually  covenanted  and  agreed  by  and 
between  the  Licensor  and  Licensee  that  the  Licensor  mpy 
grant  other  licenses  to  manufacture  or  import  and  sell 
motion  picture  exhibiting  or  projecting  machines  under  any 
or  all  of  the  said  United  States  Letters  Patent  Nos.  578185, 
580749,  580953,  588910,  073329,  073992,  707954,  722382, 
744251,  770937,  771280,  785205,  and  785237,  said  licenses 
to  be  in  writing,  and  not  to  be  granted  or  continued  under 
terms,  conditions,  or  stipulations  which  are  in  any  respect 
more  favorable  to  the  Licensees  named  therein  than  those 
set  forth  in  this  agreement  (except  to  the  American  Muto- 
scope  &  Biograpli  Company  of  New-  York  City,  which  is 
pay  no  royalties  on  any  exhibiting  or  projecting  machines 
embodying  any  or  all  of  the  inventions  described  and  claimed 
in  the  aforesaid  Letters  Patent  Nos.  578185,  580749,  -580953, 
58891G,  073992,  707934,  ■  and  722382,  and  to  .the  -Edison 

65498-12 - 13 


PETITION,  EXHIBIT  5. 


96  ORIGINAL  PETITION,  EXHIBIT  5. 


ORIGINAL  I 


.Manufacturing  Company,  of  Orange,  New  Jersey,  and  the 
firm  of  Marvin  and  Casler,  of  Canastota,  New  York,  neither 
of  which  is  to  pay  any  royalties  on  any  exhibiting  or  pro¬ 
jecting  machines  embodying  any  or  all  of  the  inventions 
described  and  claimed  in  the  aforesaid  letters  Patent  Nos. 
67SXS5,  580749,  5SG953,  588910,  073992,  707934,  ai.d 

-722382,  when  such  exhibiting  or  projecting  machines  are  sold 
bona  fide  for  export,  the  covenants  and  conditions  in  the 
licenses  to  each  and  all  of  the  said  firms  or  corporations  to 
be  otherwise  like  those  set  forth  in  this  agreement). 

(12)  It  is  mutually  covenanted  and  agreed  by  and  be¬ 
tween  the  Licensor  and  Licensee  that,  unless  sooner  ter¬ 
minated,  as  hereinbefore  and  hereinafter  provided,  this 
agreement,  and  the  license  granted  thereby,  shall  take  effect 
on  February  1,  1909,  and  shall  continue  until  June  20,  1910, 
but  that  the  Licensee  may  renew  this  agreement  and  license 
thereafter  from  year  to  year  upon  the  same  terms,  conditions, 
and  stipulations  as  herein  provided,  by  giving  notice  to  the 
Licensor  on  or  before  the  20tli  day  of  March  in  each  year  be¬ 
ginning  with  the  year  1910,  of  the  Licensee’s  election  to  so 
renew  this  agreement  and  license,  and  upon  the  giving  of 
each  such  notice  this  agreement  and  the  license  thereby 
granted  shall  be  considered  and  treated  by  the  Licensor  and 
Licensee  as  renewed  for  the  period  of  one  year,  beginning 
June  20th  of  the  year  following  such  notice,  and  such  notice 
and  renewal  may  be  given  and  made  by  the  Licensee  during 
the  life  or  lives  of  each  or  all  of  the  patents  under  which  the 
Licensee  is  hereby  licensed. 

In  case,  however,  that  the  Licensor  should  become  bank¬ 
rupt,  cease  doing  business,  or  should  be  dissolved,  voluntarily 
or  otherwise,  or  its  charter  should  be  repealed,  then,  on  the 
happening  of  e  tlier  of  such  events,  this  agreement  and  the 
with  the  additional  Licensee  hereinbefore 
piovi^ed  for,  that  are  then  in  force,  shall  forthwith  ter¬ 
minate  and  be  at  an  end. 

kJmL"  covenanted  and  agreed  by 

and  between  the  Licensor  and  Licensee,  that  if,  during  said 
original  term  or  during  any  such  renewal  period,  either 


party  should,  knowingly  or  through  gross  neglect  or  care¬ 
lessness,  be  guilty  of  a  breach,  violation,  or  nonperformance 
of  its  covenants,  conditions,  and  stipulations  resulting  in 
substantial  injury  to  the  other  party,  and  should,  for  the 
period  of  forty  (40)  days  after  notice  thereof  from  the  other 
party  persist  therein  or  fail  to  correct,  repair,  or  remedy  the 
same,  then  and  in  such  case  the  party  aggrieved  may  ter¬ 
minate  this  agreement  by  giving  notice  in  writing  to  the 
gnilty  party  of  its  intention  so  to  do.  It  is,  however, 
mutually  covenanted  and  ngreed  by  and  between  the  Licensor 
and  Licensee  that  if  the  guilty  party  should  correct,  repair, 
or  remedy  such  breach,  violation,  or  nonperformance  of  its 
covenants,  conditions,  and  stipulations  within  the  said 
period  of  forty  (40)  days  after  such  notice,  and  should  there¬ 
after  knowingly  or  through  gross  neglect  or  carelessness  be 
guilty  of  a  second  breach,  violation,  or  nonperformance  of 
its  covenants,  conditions,  and  stipulations,  resulting  in 
substantial  injury  to  the  other  party,  then  and  in  such  case, 
the  party  aggrieved  may  terminate  this  agreement  by  giving 
thirty  (30)  days’  notice  in  writing  to  the  guilty  party  of  its 
intention  so  to  do.  Such  termination  of  the  agreement, 
however,  shall  not  prejudice  either  party  hereto  in  the 
recovery  of  damage  because  of  any  such  breach,  violation,  or 
nonperformance  by  the  other  party  hereto. 

(14)  All  notices  provided  for  in  this  agreement,  shall  be 
in  writing  and  shall  be  given  by  delivering  the  same  to  the 
Licensor  or  Licensee,  as  the  case  may  be,  or  by  depositing 
such  notices,  postage  prepaid,  in  any  post  office  of  the 
United  States,  in  a  sealed  envelope  directed  to  the  Licensor 
or  Licensee,  as  the  case  may  be,  at  its  last  known  post-office 
address,  to  be  forwarded  by  registered  mail. 

(15)  It  is  mutually  covenanted  and  ngreed  by  and  between 
the  Licensor  and  Licensee  that  after  notice  of  the  termination 
of  this  agreement  and  the  license  granted  thereby  by  either 
party,  as  provided  for  in  paragraph  13  of  this  agreement, 

.  and  after  the  same  have  been  terminated,  no  matter  what  the 
cause  or  manner  of  termination  may  be,  neither  this  license 
agreement,  nor  the  fact  that  the  Licensee  lias  entered  into 


98  ORIGINAL  PETITION,  EXHIBIT  5. 

or  acted  under  it,  shall  he  used  in  any  manner,  directly  or 
indirectly,  by  or  for  the  Licensor,  its  successors,  assigns  or 
legal  representatives  or  hy  or  for  others  with  its  or  their 
consent  or  permission,  against  the  Licensee,  or  the  Licensee’s 
successors  or  legal  representatives,  in  any  litigation,  con¬ 
troversy  or  proceeding  involving  the  Licensee,  or  them  or 
any  other  persons,  firms  or  corporations,  or  in  any  other  way, 
it  being  understood  and  agreed  that  upon  such  termination 
the  positions  and  rights  of  the  Licensor  and  Licensee  shall  be 
the  same  as  if  this  agreement  had  not  been  made;  provided, 
however,  that  the  rights  of  neither  party  shall  be  prejudiced 
by  such  termination  in  the  recovery  of  damages  for  any 
breach  or  other  violation  of  this  agreement  by  the  other 
occurring  prior  to  such  termination. 

In  witness  whereof,  the  parties  hereto  have  caused  this 
agreement  to  be  executed  by  their  officers  duly  authorized 
to  perform  those  acts,  the  day  and  year  first  above  written. 

Motion  Picture  Patents  Company, 
By  Frank  L.  Dyer,  President. 

Armat  Moving  Picture  Company, 
By  Thos.  Armat,  President. 

Attest: 

George  F.  Scull,  Secretary. 

Attest: 

Louis  H.  Stabler,  Secretary. 


1 
;  /S 

V'V 


. 


Charter  of  General  Film  Company,  April  18, 
1910. 


State  op  Maine; 

Certificate  of  organization  of  a  corporation  under  the  general 
law. 

The  undersigned,  officers  of  a  corporation  organized  at 
Portland,  Maine,  at  a  meeting  of  the  signers  of  the  articles 
of  agreement  therefor,  duly  called  and  held  at  No.  9E> 
Exchange  Street,  in  the  city  of  Portland,  State  of  Maine,  on 
Monday,  the  eighteenth  day  of  April,  A.  D.  1910,  hereby 
certify  as  follows: 

The  name  of  said  corporation  is  General  Film  Company. 

The  purposes  of  said  corporation  are— 

For  the  purpose  of  buying,  selling,  or  otherwise  acquiring 
or  disposing  of  letters  patent  and  licenses  under  letters  patent 
for  inventions  pertaining  to  the  production  and  use  of  pho¬ 
tographic  or  other  negatives  and  photographic  or  other  posi¬ 
tives,  of  objects  at  rest  and  objects  in  motion;  manufacturing, 
buying,  using,  selling,  or  otherwise  acquiring  or  disposing  of,  or 
leasing,  apparatus,  materials,  processes,  and  rights,  pertaining 
to  the  production  and  use  of  photographic  or  other  negatives 
and  photographic  or  other  positives,  of  objects  at  rest  and 
objects  in  motion;  manufacturing,  buying,  using,  selling,  or 
otherwise  acquiring  or  disposing  of,  or  leasing,  photographic  or 
other  negatives  and  photographic  or  other  positives  of  objects 
at  rest  and  objects  in  motion;  manufacturing,  buying,  using, 
selling,  or  otherwise  acquiring  or  disposing  of,  or  leasing, 
apparatus  and  materials  of  every  character  used  in  exhibi¬ 
tions,  entertainments,  motion-picture  shows  and  theatrical 
performances,  and  in  equipping  theaters,  halls,’  and  similar 
99 


100 


ORIGINAL  PETITION)  EXHIBIT  6. 


ORIGINAL  PETITION, 


EXHIBIT  0. 


101 


places  of  amusement,  entertainment,  and  instructions;  pur¬ 
chasing  and  holding  such  real  and  personal  property  necessary 
for  or  incidental  to  the  purposes  of  this  company,  or  any  of 
them;  mortgaging,  leasing,  selling,  or  disposing  of  by  agree¬ 
ment  or  otherwise,  and  conveying,  any  and  all  of  the  real  or 
personal  property  of  the  corporation;  buying  or  otherwise 
acquiring  and  holding,  selling,  or  otherwise  disposing  of, 
the  stocks,  bonds,  notes,  and  other  evidences  of  indebtedness 
of  any  domestic  or  foreign  corporation,  and  issuing  and 
delivering  its  stock,  bonds,  or  other  obligations  in  payment 
or  exchange  for  stock,  bonds,  and  other  obligations  of  other 
corporations  organized  for  purposes  similar  to  the  purposes 
of  this  corporation  or  conducting  a  business  similar  to  that 
herein  provided  for  or  capable  of  being  conveniently  carried 
on  in  connection  with  the  business  above  described;  conduct¬ 
ing  its  business  in  all  its  branches,  and  having  one  or  more 
offices;  holding,  leasing,  or  conveying  real  or  personal  prop¬ 
erty  in  all  States  and  in  all  foreign  countries  to  which  the 
business  of  the  company  may  be  extended,  and  borrowing 
money  and  doing  any  acts  to  protect  and  improve  the  business 
of  the  corporation  and  enhance  the  value  of  its  property. 

To  issue  any  and  all  bonds  necessary  to  the  business  of 
the  corporation,  and  to  secure  the  same  by  mortgage,  deed 
of  trust,  or  any  other  form  of  conveyance;  to  issue  as  pre¬ 
ferred  stock  such  part  of  its  capital  stock  as  shall  be  flxed 
aiid’ determined  in  the  by-laws;  to  acquire  and  undertake 
the  whole  or  any  part  of  the  business,  property,  assets,  and 
liabilities  of  any  person,  firm,  or  corporation  engaged  in 
a  business  similar  to  that  herein  provided  for,  or  capable 
of  being  conveniently  carried  on  in  connection  with  the 
business  above  described;  to  do  all  or  any  part  of  the  above 
things  as  principals,  agents,  contractors,  or  otherwise,  and 
by  or  through  agents,  or  otherwise,  and  either  alone  or  in 
conjunction  with  others;  and  to  do  any  and  all  things  inci¬ 
dental  to  the  prosecution  of  the  purposes  herein  contained, 
or  any  of  them,  and  not  inconsistent  with  the  laws  of  the 
State  of  Maine. 


The  amount  of  capital  stock  is  two  million  ($2,000,000) 
dollars. 

The  amount  of  preferred  stock  is  one  million  live  hundred 
thousand  ($1,500,000)  dollars. 

The  amount  of  common  stock  is  five  hundred  thousand 
($500,000)  dollars. 

The  amount  of  capital  stock  already  paid  in  is  eleven 
thousand  four  hundred  ($11,400)  dollars. 

The  par  value  of  the  shares  is  one  hundred  ($100)  dollars 

The  names  and  residences  of  the  owners  of  said  shares 
arc  as  follows : 


George  Kleine . : . 

George  K.  Spoor . 

Blograph  Company.. 


leaving  in  the  treasury,  unsubscribed  for  10,880  shares,  of 
which  14,991  are  preferred  and  4,895  are  common. 

Said  corporation  is  located  at  Portland,  in  the  county  of 
Cumberland. 

The  number  of  directors  is  ten  and  their  names  are  Prank  L. 
Dyer,  J.  A.  Berst,  Gaston  Melies,  William  M.  Selig,  Sicgmund 
Lubin,  Samuel  Long,  J.  J.  Kennedy,  William  T.  Bock, 
George  Kleine,  and  .George  K.  Spoor.  . 

The  name  of. the  clerk  is. L.  L.  Highland  his  residence  is 
Portland,  Maine, 


102 


ORIGINAL  PETITION,  EXHIBIT  6. 


Tlie  undersigned,  J.  J.  Kennedy,  is  president;  the  under¬ 
signed  J.  A.  Berst,  is  treasurer,  and  the  undersigned,  J.  J. 
Kennedy,  J.  A.  Berst,  George  Kleine,  Samuel  Long,  Sieg- 
mund  Lubin,  W.  M.  Selig,  Gaston  Mclics,  and  William  T. 
Bock  are  a  majority  of  the  directors  of  said  corporation. 
Witness  our  hands  this  eighteenth  day  of  April,  A.  D.  1910. 

J.  J.  Kennedy, 

President. 

J.  A.  Berst, 

Treasurer. 
J.  J.  Kennedy, 

J.  A.  Berst, 

George  Kleine, 
Samuel  Long, 
Siegmund  Lubin, 

W.  M.  Selig, 

Gaston  Mblies, 

Wm.  T.  Kook, 

.  Directors. 


Portland,  Maine,  April  15, 1910. 

Then  personally  appeared  J.  J.  Kennedy,  J.  A.  Berst, 
George  Kleine,  Samuel  Long,  Siegmund  Lubin,  Wm.  M. 
Selig,  Gaston  Melies,  and  William  T.  Bock,  and  severally 
made  oath  to  the  foregoing  certificate,  that  the  same  is  true. 

Before  me, 

Harry  P.  Sweetser, 
Justice  of  the  Peace. 

State  op  Maine, 

Attorney  General’s  Oppioe, 

April  SO,  1910. 

I  hereby  certify  that  I  have  examined  the  foregoing  certifi¬ 
cate,  and  the  same  is  properly  drawn  and  signed,  and  is  con¬ 
formable  to  the  constitution  and  laws  of  the  State. 

Charles  P.  Barnes, 
Asst.  Attorney  General. 


•fU 

iSf 


original  petition,  exhibit  6.  103 

(Endorsed:)  Copy.  (Name  of  corporation)  General  Film 
Company.  Cumberland,  SS.  Begistry  of  Deeds.  Kcceived 
April  21,  1910,  at  10  h.  5  m.  a,  m.  Becordcd  in  vol.  42, 
page  69.  Attest:  Frank  L.  Clark,  Begister.  A  true  copy 
of  record.  Attest:  Frank  L.  Clark,  Begister.  State  of  Maine. 
Office  of  Secretary  of  State.  Augusta,  April  21,  1910. 
Beceived  and  filed  this  day.  Attest:  A.  I.  Brown,  Secretary 
of  State.  Bccorded  in  vol.  73,  page  309. 

65498-12 - 14 


Agreement  Between  Motion  Picture  Patents 

Company  and  General  Film  Company, 

April  21,  1910. 

1  This  agreement,  made  this  21st  day  of  April,  1910,  by 
and  between  the  Motion  Picture  Patents  Company,  a  cor- 
'  poration  organized  and  existing  under  the  laws  of  the  State 
of  New  Jersey,  and  having  an  office  in  the  city,  county,  and 
State  of  New  York,  party  of  the  first  part  (hereinafter 
referred  to  as  the  Licensor),  and  the  General  Film  Company, 
a  corporation  organized  and  existing  under  the  laws  of  the 
State  of  Maine,  and  having  an  office  in  said  city  of  New 
York,  party  of  the  second  part  (hereinafter  referred  to  as 
the  Licensee),  witnesseth  that:  _ 

2.  Whereas  the  Licensor  represents  that  it  is  organized 
to  own,  deal  in,  and  grant  licenses  under  letters  patent  per¬ 
taining  to  the  motion-picture  art,  and  that  it  is  the  owner  of 
all  the  right,  title,  and  interest  in  and  to  the  following  United 
States  Letters  Patent  relating  to  that  art— 

No.  578185,  dated  March  2,  1897,  for  vitascope,  granted  to 
Thomas  Armat. 

No.  580749,  dated  April  13,  1897,  for  vitascope,  granted  to 
Thomas  Armat. 

No.  580953,  dated  July  20,  1897,  for  plmntoscope,  granted 
to  Charles  F.  Jenkins  and  Thomas  Armat. 

No.  588916,  dated  August  24,  1897,  for  kinetoscope, 
granted  to  Charles  M.  Campbell,  as  the  assignee  of  Willard 
G.  Steward  and  Ellis  F.  Frost. 

No.  6290G3,  dated  July  18,  1899,  for  kinetoscopic  camera, 
granted  to  American  Mutoscope  Company  as  the  assignee  of 
Herman  Casler. 

No.  673329,  dated  April  30,  1901,  for  kinetoscope,  granted 
to  The  American  Yitagraph  Company  ns  the  assignee  of 
Albert  E.  Smith. 


ORIGINAL  PETITION,  EXHIBIT  7.  105 

No.  673992,  dated  May  14,  1901,  for  vitascope,  granted  to 
Thomas  Armat. 

No.  707934,  dated  August  26,  1902,  for  projecting  kineto¬ 
scope,  granted  E.  &  H.  T.  Anthony  &  Co.,  as  assignees  of 
Woodville  Latham. 

No.  722382,  dated  March  10,  1903,  for  animated-picture 
apparatus,  granted  to  American  Mutoscope  and  Biograph 
Company  as  the  assignee  of  John  A.  Pross; 

No.  744251,  dated  November  17,  1903,  for  kinetoscope, 
granted  Albert  E.  Smith; 

No.  770937,  dated  September  27,  1904,  for  kinetoscope, 
granted  the  Vitngraph  Company  of  America  as  the  assignee 
of  Albert  E.  Smith ; 

No.  771280,  dated  October  4,  1004,  for  winding  reel, 
granted  Albert  E.  Smith ; 

No.  785205,  dated  March  21,  1905,  for  fiame-sliield  for 
kinetoscopcs,  granted  the  Vitagrapli  Company  of  America 
ns  the  assignee  of  William  Ellwood ;  and 

No.  785237,  dated  March  21,  1905,  for  film-holder  for 
kinctoscopes,  granted  the  Yitagraph  Company  of  America 
as  the  assignee  of  Albert  E.  Smith;  and 

3.  Whereas,  the  Licensor  is  the  owner  of  all  the  right, 
title,  and  interest  in  and  to  reissued  letters  patent  of  the 
United  States  numbered  12,192,  dated  January  12th,  1904, 
the  original  letters  patent  whereof  are  numbered  5891G8  and 
dated  August  31,  1897,  under  which  reissued  letters  patent 
licenses  have  been  granted  to  the  Edison  Manufacturing 
Company  of  Orange,  New  Jersey;  Pathe  Freres,  of  New 
York,  New  York;  the  Kolem  Company  (Inc.),  of  New 
York,  New  York;  the  Essanay  Film  Manufacturing  Com¬ 
pany  of  Chicago,  Illinois;  the  Lubin  Manufacturing  Com¬ 
pany  of  Philadelphia,  Pennsylvania;  Gaston  Melics,  of  New 
York,  New  York,  (for  himself  and  as  attorney  in  fact  for 
George  Melics  of  Paris,  France) ;  the  Selig  Polyscope  Com¬ 
pany  of  said  Chicago;  the  Vitagrapli  Company  of  America, 
of  New  York,  New  York;  George  Kleine  of  said  Chicago,  and 
the  Biograpli  Company,  of  New  York,  New  York  (which 
licensees  are,  with  their  successors  as  -.such,  hereinafter 
referred  to  ns  “Patents  Company  Licensees”) ;  and 


10G  ORIGINAL  PETITION,  EXHIBIT  7. 

4.  Whereas,  the  Licensee  desires  to  obtain  from  the 
Licensor  a  license  under  said  reissued  Letters  Patent  12192, 
and  to  lease  positive  motion  pictures  in  certain  territory,  for 
use  in  exhibiting  or  projecting  machines  containing  the 
inventions,  or  any  of  them,  described  and  claimed  in  said 
Letters  Patent  Nos.  578185,  580749,  5SG953,  58891G,  073329, 
G73992,  707934,  722382,  744251,  770937,  771280,  785205,  and 
785237,  and  to  sell  positive  motion  pictures  in  certain  other 
territory; 

5.  Now,  therefore,  the  parties  hereto,  for  and  in  consid¬ 
eration  of  the  sum  of  one  dollar  to  each  paid  by  the  other, 
and  for  other  good  and  valuable  considerations  from  each  to 
the  other  moving,  receipt  of  all  of  which  is  hereby  acknowl¬ 
edged,  have  agreed  as  follows : 

G.  The  Licensor  hereby  grants  to  the  Licensee,  for  the 
term  and  subject  to  the  covenants,  conditions,  and  stipula¬ 
tions  hereinafter  expressed,  the  right  and  license  for  the 
United  States,  its  territories,  dependencies,  and  possessions 
(hereinafter  called  the  “territory  aforesaid”)  to  have  posi¬ 
tive  motion  pictures  manufactured  for  it  by  “Patents  Com¬ 
pany  Licensees,”  and  which  motion  pictures  it  shall  own, 
on  film  of  a  greater  width  than  approximately  one  inch, 
embodying  the  inventions  of  said  reissued  Letters  Patent 
No.  12192,  from  negative  motion  pictures  made  in  foreign 
countries  and  which  are  procured  by  it  from  others  than 
“Patents  Company  Licensees,”  and  to  purchase  positive 
motion  pictures  manufactured  in  foreign  countries,  and  to 
lease  said  positive  motion  pictures,  so  manufactured  for  and 
purchased  by  it,  in  the  United  States,  its  territories,  depend¬ 
encies,  and  possessions  (with  the  exceptions  of  its  insular 
possessions  and  Alaska),  hereinafter  referred  to  ns  the 
“lease  territory  aforesaid,”  to  motion  picture  exhibitors 
upon  condition  that  they  be  used  solely  in  exhibiting  or  pro¬ 
jecting  machines  containing  the  inventions  or  some  of  them 
of  said  Letters  Patent  Nos.  578185,  580749,  58G953,  58891G 
073329,  073992,  707934.  722382,  744251,  770937,  771280. 
785205,  and  785237,  and  licensed  by  the  Licensor  and  to 
sell  said  positive  motion  pictures  so  manufactured  for  and 


ORIGINAL  PETITION,  EXHIBIT  7.  ][)7 

purchased  by  it,  in  or  for  said  insular  possessions  and  Alaska 
and  foreign  countries,  hereinafter  referred  to  as  “said  export 
territory”  or  “for  export”;  it  being  understood  and  agreed 
by  the  Licensor  and  Licensee  that  the  latter  in  the  leasing 
of  a  positive  motion  picture  shall  not  be  limited  to  a  single 
lease  thereof  to  one  motion  picture  exhibitor,  but  that  it 
may,  subject  to  the  provisions  of  section  5  of  paragraph 
hereof  numbered  14,  lease  the  same  as  often  and  to  as  many 
different  motion  picture  exhibitors  as  it  may  desire. 

The  License  hereby  granted  is  personal  to  the  Licensee 
and,  in  the  event  of  the  permanent  discontinuance  or  retire¬ 
ment  from  business  of  the  Licensee  for  a  period  of  six  con¬ 
secutive  months,  the  license  hereby  granted  shall  be  imme¬ 
diately  terminated. 

7.  The  Licensee  hereby  recognizes  and  admits  the  validity 

of  said  reissued  Letters  Patent  No.  12192  and  Letters  Patent 
Nos.  578185,  580749,  58G953,  58891G,  G73329,  G73992 

707934,  7223S2,  744251,  770937,  771280,  785205,  and  785237 
and  agrees  not  to  contest  or  question  the  same  during  the 
continuance  of  this  agreement. 

8.  The  Licensee  covenants  and  agrees  that  all  positive 
motion  pictures  manufactured  for  it,  in  the  “territory 
aforesaid,”  during  the  continuance  of  this  agreement,  will 
be  so  manufactured  for  it  only  by  “Patents  Company 
Licensees”;  that  in  the  manufacture  of  such  positive  motion 
pictures  in  the  “territory  aforesaid,”  it  will  have  used  only 
negative  motion  pictures  made  in  foreign  countries  and 
procured  by  it  from  others  than  “Patents  Company  Licen- 
secs”;  and  that  it  will  not,  in  the  “territory  aforesaid,”  pur¬ 
chase  or  otherwise  acquire  or  lease  or  sell  or  otherwise  dispose 
of  or  deal  in  positive  motion  pictures  except  those  manufac¬ 
tured  for  and  purchased  by  it  as  aforesaid,  without  the  con- 
sent  in  writing  of  the  Licensor,  nor  sell  or  otherwise  dispose 
of  any  negative  motion  pictures. 

9.  The  Licensee  covenants  and  agrees  that  it  will,  after 
the  license  hereby  granted  takes  effect,  pay  royalty  to  the 
Licensor  between  the  first  and  fifteenth  days  of  each  month 
on  all  negative  morion  pictures  procured  and  positive 


10S  ORIGINAL  PETITION,  EXHIBIT  7. 

motion  pictures  purchased  by  it  as  aforesaid  during  the 
preceding  month,  at  the  maximum  rate  of  onelinlf  (Vs)  cent 
per  running  foot  hereinafter  provided  for;  that  it  will  keep 
accurate  hooks  of  account  and  submit  statements  at  the 
time  of  making  such  payments  (sworn  to,  if  required  by  the 
Licensor)  giving  the  total  number  of  running  feet  of  such 
motion  pictures,  classified  according  to  subjects,  which  the 
Licensee  has  so  procured  and  purchased  during  the  preceding 
month;  that  the  Licensor  shall  have  the  right  to  inspect,  its 
books  of  account,  through  any  reputable  chartered  ac¬ 
countants,  to  determine  the  amount  of  such  motion  pictures 
-  which  it  shall  have  so  procured  and  purchased  after  the  license 
hereby  granted  takes  effect;  and  that  any  failure  to  pay 
the  said  royalties  when  due  and  payable,  or  any  making  of 
a  false  return  by  the  Licensee  of  the  amount  of  such  motion 
pictures  so  procured  and  purchased  by  it,  shall  make  the 
license  hereby  granted  terminable  by  the  Licensor. 

10.  The  Licensor  further  covenants  and  agrees  that  the 
royalties  which  it  will  charge  to  the  Licensee  for  negative 
motion  pictures  procured  and  positive  motion  pictures  pur¬ 
chased  by  the  Licensee  ns  aforesaid  shall  not,  during  the 
year  preceding  June  20,  1910,  and  during  any  year  thereafter 
during  the  continuance  of  this  agreement,  as  hereinafter  pro¬ 
vided,  exceed  the  following  rates— that  is  to  say : 

If  the  amount  of  such  motion  pictures  for  any  such  year 
be  four  million  running  feet  or  loss,  a  royalty  of  one-half  (y2l 
cent  per  running  foot  on  the  total  number  of  running  feet 
for  that  year;  if  the  amount  thereof  for  any  such  year  ex¬ 
ceed  four  million  running  feet  but  do  not  exceed  six  million 
running  feet,  a  royalty  of  four  and  one-half  (4i/»)  mills  per 
running  foot  on  the  total  number  of  running  feet  for  that 
year;  if  the  amount  thereof  for  any  such  year  exceed  six 
million  running  feet  but  do  not  exceed  eight  million  running 
feet,  a  royalty  of  four  (4)  mills  per  running  foot  on  the  total 
number  of  running  feet  for  that  year;  if  the  amount  thereof 
for  any  such  year  exceed  eight  million  running  feet  but  do 
not  exceed  ten  million  running  feet,  a  royalty  of  three  and 
three-quarters  (3%)  mills  per  running  foot  on  the  total  num- 


ORIGINAL  PETITION,  EXHIBIT  7.  109 

ber  of  running  feet  for  that  year;  and  if  the  amount  thereof 
for  any  such  year  exceed  ten  million  running  feet,  a  royalty 
of  three  and  one-quarter  (3%)  mills  per  running  foot  on  the 
total  number  of  running  feet  for  that  year. 

The  Licensor  further  covenants  and  agrees  that  it  will, 
within  thirty  (30)  days  after  June  20  of  each  year,  repay 
to  the  Licensee  any  excess  of  royalties  which  may  have  been 
paid  by  the  Licensee  during  the  year  by  reason  of  the  differ¬ 
ence  between  the  rate  of  one-lialf  (fA)  cent  per  running  foot 
which  the  Licensee  shall  have  paid  and  the  rate,  based  on  the 
total  amount  of  such  motion  pictures  procured  and  purchased 
by  it  for  the  year,  which  the  Licensee  should  have  paid  ac¬ 
cording  to  the  foregoing  schedule,  the  royalty  rate  to  be 
charged  for  the  period  between  the  date  hereof  and  June  20, 
1910,  to  be  that  which  would  have  been  charged  if  the  pro¬ 
curing  and  purchasing  of  such  motion  pictures  by  the 
Licensee  had  been  continued  for  a  year  at  the  same  rate  at 
which  they  were  so  procured  and  purchased  for  such  period. 

The  Licensor  and  Licensee  further  mutually  covenant  and 
agree  that  no  royalty  other  than  or  in  addition  to  that  pro¬ 
vided  for  in  this  paragraph  shall  be  charged  to  or  collected 
from  the  Licensee  by  the  Licensor  up  to  June  20,  1911;  or 
during  any  renewal  of  this  agreement  up  to  August  31,  1914, 
the  date  of  the  expiration  of  said  reissued  Letters  Patent 
No.  12192,  and  no  royalty  whatever  shall  be  charged  to  or 
collected  from  the  Licensee  by  the  Licensor  after  either  of 
the  claims  of  said  reissued  Letters  Patent  No.  12192  and 
either  of  the  claims  of  reissued  Letters  Patent  No.  12037, 
dated  September  30,  1902  (owned  by  the  Licensor'  and  under 
which  all  of  the  Patents  Company  Licensees,  with  the  excep¬ 
tion  of  George  Kleinc,  have  been  licensed),  in  any  suit  for 
infringement  thereof,  is  hold  invalid  by  a  court  that  last 
hears  and  decides  such  suit,  or  after  August  31,  1914,  during 
any  renewal  of  this  agreement. 

11.  The  Licensee  further  covenants  and  agrees  not  to  sell 
or  otherwise  dispose  of  or  offer  for  sale,  sin  the  “territory 
aforesaid,”  unexposed  positive  or  negative  motion  picture 
films  during  the  continuance  of  this  agreement;  hut  this 


110 


ORIGINAL  PETITION,  EXHIBIT  7. 


ORIGINAL  PETITION,  EXHIBIT  7. 


Ill 


provision  shall  not  prevent  the  Licensee  from  selling,  as 
refuse,  in  the  "territory  aforesaid,”  second-hand  positive  or 
negative  motion  pictures  which  have  been  used  or  become 
shopworn  or  in  any  way  damaged,  to  a  manufacturer  or 
manufacturers  licensed  by  the  Licensor  to  manufacture 
sensitized  motion  picture  Him  for  “Patents  Company 
Licensees,”  or  to  a  manufacturer  to  manufacture  other 
articles  than  Him  therefrom,  hut  only  after  they  have  been 
rendered  by  the  Licensee  unsuitable  for  use  as  motion 
pictures  by  cutting  or  otherwise  defacing  them;  nor  from 
selling  exposed  positive  or  negative  film  (either  waste  or  in 
rolls)  known  as  “blank  film”  for  use  by  exhibitors  for 
leaders  or  for  spacing  or  for  similar  purposes,  but  which 
shall  not  and  can  not  be  otherwise  employed  for  the  exhibi- 
tion  of  motion  pictures. 

12.  The  Licensee  further  covenants  and  agrees  not  to  lease, 
loan,  rent  out,  sell,  or  offer  for  sale,  or  otherwise  dispose  of  in 
the  “territory  aforesaid,”  motion  pictures  to  anyone  purchas¬ 
ing  or  otherwise  obtaining,  leasing,  using,  loaning,  renting 
out,  selling,  offering  for  sale,  or  otherwise  disposing  of  or 
dealing  in  motion  pictures  containing  the  invention  of  said 
reissued  Letters  Patent  No.  12192,  not  the  output  of  the 
Licensee  or  of  other  licensees  of  the  Licensor  under  said 
Letters  Patent. 


13.  It  is  further  mutually  covenanted  nnd  agreed  by  tin 
Licensor  and  Licensee  that  the  Licensee  shall  have  the  rigid 
to  sell  motion  pictures,  manufactured  for  or  purchased  by  ii 
as  aforesaid,  in  or  for  “said  export  territory,”  when  the  goods, 
addressed  to  the  purchaser,  agent,  or  consignee,  are  delivered 
to  the  vessel  or  to  a  transportation  company  for  transporta¬ 
tion  to  said  export  territory*”  and  not  otherwise;  but  in  no 
case  shall  sales  “for  export”  of  motion  pictnres  be  knowingly 
made  by  the  Licensee  to  persons,  firms,  or  corporations  whom 
such  Licensee  has  reason  to  believe  will  reimport  them  into 
the  “lease  territory  aforesaid”  for  sale  or  use. 

14.  It  is  further  mutually  covenanted  and  agreed  by  and 
between  the  Licensor  nnd  Licensee  that  no  lease  of  positive 
motion  pictures  manufactured  for  or  purchased  bv  the 


Licensee,  as  aforesaid,  shall  be  made  in  the  “lease  territory 
aforesaid”  by  the  Licensee,  except  upon  and  subject  to  the 
following  terms  and  conditions,  namely:  (1)  That  the  lessee 
of  such  positive  motion  picture  shall  not  sell  or  otherwise 
dispose  of  the  same,  but  shall  only  have  the  right  to  use  such 
positive  motion  picture  in  giving  motion-picture  exhibitions 
in  machines  licensed  by  the  Licensor  under  the  said  Letters 
Patent  Nos.  578185,  5S0749,  58G953,  58891G,  G73329,  G73992, 
707934,  722382,  744251,  770937,  771280,  785205,  and  785237, 
or  one  or  more  of  them,  or  under  any  other  letters  patent  that  it 
may  hereafter  acquire  or  control;  and  (2)  that  the  lessee  shall 
not  make  or  permit  others  to  make  any  reproduction  com¬ 
monly  known  as  a  “dupe”  of  such  positive  motion  picture  or 
any  other  positive  motion  picture  containing  the  invention 
of  said  reissued  Letters  Patent  No.  12192;  and  (3)  that  the 
lessee  shall  not  sublet  such  motion  picture;  and  (4)  that  the 
lesseo  of  such  positive  motion  picture  shall  not  remove  the 
trade-mark  or  trade  name  or  title  therefrom;  and  (5)  that 
the  Licensee  shall  on  the  first  day  of  every  month,  beginning 
with  December  1,  1910,  withdraw  from  the  market  an  amount 
of  such  positive  motion  pictures  (not  leased  by  the  Licensee 
over  twelve  months  before)  equal  to  the  amount  of  such 
positive  motion  pictures  that  was  so  leased  by  it  during  the 
seventh  month  preceding  the  date  of  each  such  withdrawal, 
with  the  exception,  however,  that  where  any  such  positive 
motion  pictures  are  destroyed  by  fire  or  lost  in  transporta¬ 
tion  the  amount  so  destroyed  or  lost  shall  be  deducted  from 
the  amount  to  be  withdrawn  as  aforesaid;  and  (6)  that  the 
violation  of  any  of  the  foregoing  conditions  entitles  the  lessor 
to  immediate  possession  of  such  motion  picture  without 
liability  for  any  price  which  the  lessee  or  the  person  in  whose 
possession  it  is  found  may  have  paid  therefor. 

15.  The  Licensee  covenants  nnd  agrees  that  in  the  “lease 
territory  aforcaid”  the  Licensee  will  dispose  of  the  positive 
motion  pictnres  manufactured  for  and  purchased  by  it,  as 
aforesaid,  only  by  the  sale  “for  export”  and  shipment  there¬ 
of  into  “said  export  territory”  or  by  the  lease  thereof  to 
motion-picture  exhibitors  for  the  purpose  only  of  using  such 


112  ORIGINAL  PETITION,  EXHIBIT  7. 

motion  pictures  for  giving  exhibitions  thereof  in  exhibiting 
or  projecting  machines  licensed  by  the  Licensor  containing 
the  inventions,  or  some  of  them,  described  and  claimed  in 
said  Letters  Patent  Nos.  578185,  580749,  58G953,  58891G, 
073329,  673992,  707934,  722382,  744251,  770937,  771280, 
785205,  and  785237,  or  in  Letters  Patent  hereafter  acquired 
or  controlled  by  the  Licensor;  and  will  not  nse  the  same  for 
the  purpose  of  giving  exhibitions  thereof  for  profit,  directly 
or  indirectly;  it  being  expressly  understood  and  agreed  by 
and  between  the  Licensor  and  Licensee,  however,  that  the 
Licensee  shall  he  at  liberty  to  give  exhibitions  of  such  posi¬ 
tive  motion  pictures  without  profit,  directly  or  indirectly, 
and  to  possible  or  prospective  lessees  or  purchasers  thereof; 
and  the  Licensee  further  covenants  anti  agrees  not  to  know¬ 
ingly  allow  positive  motion  pictures  manufactured  for  or 
purchased  by  it  under  this  agreement  to  be  used  with  any 
exhibiting  or  projecting  machine  not  licensed  by  the  Licensor 
under  the  Letters  Patent  mentioned  in  this  paragraph,  and 
that  it  may  hereafter  acquire  or  control;  or  one  or  more  of 
them,  except  by  and  with  the  consent  of  the  Licensor; 
and  also  to  refrain  from  supplying  such  motion  pictures 
manufactured  for  or  purchased  by  it  under  this  agreement, 
for  use  with  any  exhibiting  or  projecting  machine,  the 
license  for  which,  under  the  aforesaid  Letters  Patent,  or  one 
or  more  of  them,  has  been  terminated,  and  the  Licensee  has 
been  notified  thereof  by  the  Licensor;  and  also  to  refrain 
from  supplying  such  motion  pictures  manufactured  for  and 
purchased  by  it  under  this  agreement  to  any  lessee  who 
may  loan  or  sublease  such  motion  pictures  and  the  Licensee 
has  been  notified  thereof  by  the  Licensor,  or  who  may  nse 
such  motion  pictures  for  giving  exhibitions  thereof  in  ex¬ 
hibiting  or  projecting  machines  not  licensed  by  the  Licensor 
as  aforesaid,  or  the  license  for  which  lias  been  terminated 
and  the  Licensee  has  been  notified  thereof  by  the  Licensor; 
and  the  Licensor  covenants  and  agrees  to  promptly  notify 
the  Licensee  and  all  other  persons,  firms,  and  corporations 
licensed  under  said  reissued  Letters  Patent  No.  12192  of 
the  termination  of  any  license  for  the  nse  of  any  exhibiting 


ORIGINAL  PETITION,  EXHIBIT  7.  113 


or  projecting  machines  under  the  aforesaid  Letters  Patent, 
or  any  of  them. 

16.  The  Licensor  and  Licensee  further  mutually  covenant 
and  agree  that  if  in  any  suit  brought  upon  said  reissued 
Letters  Patent  No.  12192  either  of  the  claims  of  said  reis¬ 
sued  Letters  Patent  No.  12192  is  held  invalid  by  a  court 
that  last  hears  and  decides  such  suit,  or  should  be  held  by 
such  court  not  to  be  infringed,  then,  and  in  any  such  case,  the 
Licensee  may  at  once  terminate  this  agreement  and  the 
license  thereby  granted,  by  giving  notice  of  its  election  so 
to  do  to  the  Licensor. 

17.  The  Licensor  and  Licensee  further  mutually  covenant 
and  agree  that  by  the  expression  “motion  pictures”  as  used 
in  the  foregoing  agreement  is  meant  transparent  or  translu¬ 
cent  tapelike  film  having  photographs  thereon  of  objects  in 
motion. 

18.  It  is  further  mutually  covenanted  and  agreed  by 
and  between  the  Licensor  and  Licensee  that,  unless  sooner 
terminated,  as  hereinbefore  or  hereinafter  provided,  this 
agreement  and  the  license  granted  thereby  shall  take  effect' 
at  the  date  hereof,  and  shall  continue  until  June  20,  1911, 
but  that  the  Licensee  may  renew  this  agreement  and  license 
thereafter  from  year  to  yenr  upon  the  same  terms,  conditions, 
and  stipulations  as  herein  provided  by  giving  notice  to 
the  Licensor  on  or  before  April  20  of  each  year,  beginning 
with  the  year  1911,  of  the  Licensee’s  election  to  so  renew 
this  agreement  and  license,  and  upon  the  giving  of  each 
such  notice  this  agreement  and  the  license  thereby  granted 
shall  be  considered  and  treated  by  the  Licensor  and  Licensee 
as  renewed  for  a  period  of  one  year,  beginning  June  20th  of 
the  year  following  such  notice,  except  that  the  last  renewal 
period  shall  be  for  the  period  from  June  20,  1914,  to  August- 
26,  1919,^  the’  date  of  expiration  of  the  Letters  Patent 
No:  707934. 

It  is  further  mutually  covenanted  and  agreed  by  and 
between  the  Licensor  and  Licensee  that ,  if,  during  said 
original  term  or  during  any  such  renewal  -period,  i  either 
party  should  .-knowingly  or  through  gross  neglect  or  care- 


114 


ORIGINAL  PETITION,  EXHIBIT  7. 


lessness  be  guilty  of  a  breach,  violation,  or  nonperformance 
of  its  covenants,  conditions,  and  stipulations,  resulting  in 
substantial  injury  to  the  other  party,  and  should  for  the 
period  of  forty  (40)  days  after  notice  thereof  from  the  other 
party  persist  therein  or  fail  to  correct,  repniv,  or  remedy 
the  same,  then  and  in  such  case  the  party  aggrieved  may 
terminate  this  agreement  by  giving  notice  in  writing  to  the 
guilty  party  of  its  intention  so  to  do.  It  is,  however, 
mutually  covenanted  and  agreed  by  and  between  the 
Licensor  and  Licensee  that  if  the  guilty  party  should  cor¬ 
rect,  repair,  or  remedy  such  breach,  violation,  or  non¬ 
performance  of  its  covenants,  conditions,  and  stipulations 
within  the  said  period  of  forty  (40)  days  after  such  notice, 
and  Bhould  thereafter  knowingly  or  through  gross  neglect  or 
carelessness  be  guilty  of  a  second  breach,  violation,  or  non¬ 
performance  of  its  covenants,  conditions,  and  stipulations, 
resulting  in  substantial  injury  to  the  other  party,  then  and 
in  such  case  the  party  aggrieved  may  terminate  this  agree¬ 
ment  by  giving  thirty  (30)  days’  notice  in  wilting  to  the 
guilty  party  of  its  intention  so  to  do.  Such  termination  of 
the  agreement,  however,  shall  not  prejudice  either  party 
hereto  in  the  recovery  of  damages  because  of  any  such 
breach,  violation,  or  nonperformance  by  the  other  party 
hereto. 

19.  All  notices  provided  for  in  this  agreement  shall  be  in 
writing  and  shall  be  given  by  delivering  the  same  to  the 
Licensor  or  Licensee,  as  the  case  may  be,  or  to  an  officer  of 
the  Licensor  or  Licensee,  as  the  case  may  be,  or  by  depositing 
such  notice,  postage  prepaid,  in  any  post  office  of  the  United 
States,  in  a  sealed  envelope  directed  to  the  Licensor  or  the 
Licensee,  as  the  case  may  be,  at  its  last  known  post-office 
address,  to  be  forwarded  by  registered  mail. 

20.  It  is  mutually  covenanted  and  agreed  by  and  between 
the  Licensor  and  Licensee  that  after  notice  of  the  termination 
of  this  agreement  and  the  license  granted  thereby  by  either 
party,  as  provided  for  in  paragraphs  16  and  18  of  this  agree¬ 
ment,  and  after  the  same  have  been  terminated,  no  matter 
what  the  cause  or  manner  of  termination  may  be,  neither 


ORIGINAL  PETITION,  EXHIBIT  7.  115 

this  license  agreement,  nor  the  fact  that  the  Licensee  has 
entered  into  or  acted  under  it,  Bhall  be  used  in  any  manner, 
directly  or  indirectly,  by  or  for  the  Licensor,  its  successors, 
assigns  or  legal  representatives,  or  by  or  for  others  with  its 
or  their  consent  or  permission,  against  Licensee,  or  the 
Licensee’s  successors  or  legal  representatives,  in  any  litiga¬ 
tion,  controversy  or  proceeding  involving  the  Licensee  or 
them  or  any  other  persons,  firms  or  corporations,  or  in  any 
other  way,  it  being  understood  and  agreed  that  upon  such 
termination  the  positions  and  rights  of  the  Licensor  and 
Licensee  shall  be  the  same  as  if  this  agreement  had  not 
been  made;  provided,  however,  that  the  rights  of  neither 
party  shall  be  prejudiced  by  such  termination  in  the  recovery 
of  damages  for  any  breach  or  other  violation  of  this  agree¬ 
ment  by  the  other  occurring  prior  to  such  termination. 

In  witness  whereof,  the  parties  hereto  have  caused  this 
agreement  to  be  executed  by  their  officers  duly  authorized 
to  perform  these  acts,  the  day  and  year  first  above  written. 

Motion  Picture  Patents  Company, 
By  Prank  L.  Dyer,  President. 

General  Film  Company, 
By  J.  J.  Kennedy,  President. 

Attest: 

George  P.  Soull, 

Secretary. 


Exhibit  8. 

Agreement  Between  General  Film  Company 
and  Edison  Manufacturing1  Company, 
April  21,  1910. 

1.  Articles  of  agreement,  made  and  entered  into  tliis  - 

day  of - ,  1010,  by  and  between  the  Edison  Manufac¬ 

turing  Company,  a  corporation  organized  and  existing  under 
tbe  laws  of  the  State  of  New  Jersey,  and  having  an  office  in 
the  city  of  Orange  in  Baid  State,  party  of  the  first  part,  and 
the  General  Film  Company,  a  corporation  organized  and 
existing  under  the  laws  of  the  State  of  Maine,  and  having  an 
office  in  the  city,  county,  and  State  of  New  York,  parly  of 
the  second  part;  witnessetli  that: 

2.  Whereas  the  party  of  the  first  part  has  been  licensed  by 
the  Motion  Picture  Patents  Company;  of  New  York  City,  to 
manufacture  motion  pictures  by  the  use  of  cameras  under 
reissued  Letters  Patent  No.  12037,  dated  September  30,  1902, 
Letters  Patent  No.  029063,  dated  July  18,  1899,  and  Letters 
Patent  No.  707934,  dated  August  20,  1902,  and  containing 
the  inventions  of  reissued  Letters  Patent  No.  12192,  dated 

January  12,  1904, - ,  and  to  lease  positive  motion 

pictures  so  manufactured - by  it  (hereinafter  referred 

to  as  “Licensed  Motion  Pictures”)  for  use  on  projecting 
machines  licensed  by  said  Motion  Picture  Patents  Company 
(hereinafter  referred  to  as  “Licensed  Projecting  Machines”) 
under  Letters  Patent  Nos.  578185,  580749,  580953,  588910, 
037329,  073992,  707934,  722382,  744251,  770937,  771280, 
785205,  and  785237,  owned  by  said  Motion  Picture  Patents 
Company,  covering  motion  picture  projecting  machines;  and 

3.  Whereas,  the  party  of  the  second  part  has  been  licensed 
by  said  Motion  Picture  Patents  Company  to  lease  such 
“Licensed  Motion  Pictures,”  but  only  on  film  of  a  greater 
width  than  approximately  one  (1)  inch,  from  persons,  firms 
and  corporations  licensed  by  said  Motion  Picture  Patents 
Company  to  manufacture  or  manufacture  and  import  such 


ORIGINAL  PETITION,  EXHIBIT  8. 


"Licensed  Motion  Pictures,”  and  to  sublet  the  said  “Licensed 
Motion  Pictures  ”  in  certain  territory  (which,  however,  may 
hereafter  be  extended),  to  motion  picture  exhibitors  for  use 
on  “Licensed  Projecting  Machines”;  and  has  also  been 
licensed  by  said  Motion  Picture  Patents  Company  to  have 
positive  motion  pictures  (hereinafter  included  in'  'the  term 
“Licensed  Motion  Pictures”)  manufactured  for  it  by  certain 
of  said  licensees,  including  the  party  of  the  first  part  (and 
hereinafter  referred  to  as  the  “Patents  Company  Licensees 
aforesaid”)  on  film  of  the  width  aforesaid,  embodying  the 
inventions  of  said  reissued  Letters  Patent  No.  12192  from 
negative  motion  pictures  made  in  foreign  countries  and 
which  are  procured  by  it  from  others  than  the  “Patents 
Company  Licensees  aforesaid,”  and  which  positive  motion 
pictures  it  shall  own,  and  also  to  purchase  positive  motion 
pictures  (hereinafter  included  in  the  term  “Licensed  Motion 
Pictures”)  manufactured  in  foreign  countries,  and  to  lease 
all  said  positive  motion  pictures  to  motion  picture  exhibit¬ 
ors  for  use  by  such  exhibitors  on  “Licensed  Projecting 
Machines”;  and 

4.  Whereas,  the  party  of  the  second  part  is  desirous  of 
leasing  “Licensed  Motion  Pictures,”  on  film  of  the  width 
aforesaid,  from  the  party  of  tbe  first  part  for  the  purpose  of 
subleasing  the  same  to  motion  picture  exhibitors,  under  its 
license  aforesaid  from  the  Motion  Picture  Patents  Company; 

5.  Now,  therefore,  the  parties  hereto  of  the  first  and  sec¬ 
ond  parts  do  hereby  covenant  and  agree  as  follows: 

0.  The  party  of  the  first  part  covenants  and  agrees  that 
it  will,  during  the  continuance  of  this  agreement,  supply 
the  party  of  the  second  part  with  ns  mnny  copies  of  each 
“Licensed  Motion  Picture,”  released  by  the  party  of  the 
first  part,  on  film  of  the  width  aforesaid,  as  the  party  of 
the  second  part  requires  for  the  conduct  of  its  business, 
and  will  so  supply  them  at  the  same  leasing  prices  and 
otherwise  upon  the  snme  terms  and  conditions  ns  it,  at 
corresponding  times,  lenses  such  “Licensed  Motion  Pictures” 
to  other  persons,  firms,  or  corporations,  and  that  it  will  not, 
dnring  the  continuance  of  this  agreement,  discriminate 
against  the  party  of  the  second  part,  in  favor  of  other  per- 


118  ORIGINAL  PETITION,  EXHIBIT  8. 

sons,  firms,  or  corporations  to  whom  it  leases  sueli  “Licensed 
.Motion  Pictures,”  in  filling  orders  for  sueli  “Licensed 
Motion  Pictures,”  in  terms  of  payment  tlierefor  or  in  any 
other  way  which  might  give,  or  tend  to  give,  such  other 
persons,  firms,  or  corporations  any  advantage  over  the  party 
of  the  second  part. 

7.  The  party  of  the  second  part  covenants  and  agrees 
that  it  will,  during  the  continuance  of  this  agreement,  lease 
from  the  party  of  the  first  part  “Licensed  Motion  Pictures,” 
on  film  of  the  width  aforesaid,  at  the  prices  and  upon  the 
terms  and  conditions  provided  for  in  the  last  preceding 
paragraph,  and  that  it  will,  on  each  Monday,  make  or  mail 
payment  to  the  party  of  the  first  part  for  all  such  “Licensed 
Motion  Pictures,”  shipped  by  the  party  of  the  first  part 
to  the  party  of  the  second  part,  on  the  order  of  the  latter, 
and  for  which  the  party  of  the  second  part  has  received 
invoices  from  the  party  of  the  first  part,  during  the  preced¬ 
ing  week;  and  that  it  will  use  its  best  efforts  to  intro¬ 
duce  the  same  to  and  extend  the  use  thereof  by  motion- 
picture  exhibitors  using  the  “Licensed  Projecting  Machines,” 
aforesaid;  that  for  each  sixty-two  customers  or  the  major 
fraction  thereof  that  it  serves  during  any  two  consecutive 
weeks  during  the  continuance  of  this  agreement  from  any 
place  of  business  operated  by  it  for  the  purpose  of  lensing 
and  subleasing  motion  pictures  among  motion-picture 
exhibitors,  it  will  lease  from  the  party  of  the  first  part,  during 
each  such  two  consecutive  weeks,  and  will  distribute  from 
each  such  place  of  business,  one  reel,  of  a  subject  or  subjects 
released  by  the  party  of  the  first  part  not  more  than  one 
month  previously,  of  approximately  one  thousand  (1,000) 
running  feet  of  such  “Licensed  Motion  Pictures,”  and  that 
it  will  so  lease  such  a  reel  for  each  such  place  of  business 
during  any  such  two  consecutive  weeks,  even  if  its  cus¬ 
tomers,  which  it  solves  from  such  place  of  business  during 
such  two  consecutive  weeks,  do  not  aggregate  sixty-two 
customers  or  the  major  fraction  thereof;  it  being  expressly 
covenanted  and  agreed,  however,  by  and  between  the  parties 
hereto  that  the  party  of  the  second  part  shall  not  be  required 
to  lease  from  the  party  of  the  first  part  move  than  eighty  (SO) 


ORIGINAL  PETITION,  EXHIBIT  8.  119 

reels  of  approximately  one  thousand  (1,000)  running  feet 
per  reel  of  “Licensed  Motion  Pictures”  in  any  two  con¬ 
secutive  weeks;  and  further  that  it  may  lease  “Licensed 
Motion  Pictures”  on  film  of  the  width  aforesaid  from  other 
“Patents  Company  Licensees  aforesaid”  than  the  party  of 
the  first  part,  and  sublet  such  “Licensed  Motion  Pictures” 
to  motion-picture  exhibitors. 

8.  The  party  of  the  second  part  further  covenants  and 
agrees  that  it  will,  in  addition  to  the  leasing  prices  herein¬ 
before  referred  to,  pay  to  the  party  of  the  first  part,  at  the 
end  of  each  year  during  the  continuance  of  this  agreement, 
the  following  share  of  the  net  profit  realized  by  it  during 
that  year  from  the  subleasing  and  leasing,  as  aforesaid,  of 
“Licensed  Motion  Pictures,”  to  exhibitors  and  from  the  sale 
of  “Licensed  Projecting  Machines,”  and  from  all  other 
sources,  to  wit:  Such  a  proportion  of  the  balance,  if  any,  of 
such  net  profit,  remaining  after  deducting  therefrom  the 
dividend  of  seven  per  cent  (7 %)  for  that  year  on  its  issued 
preferred  stock  and  an  amount  equal  to  a  twelve  per  cent 
(12%)  dividend  on  its  issued  common  stock,  ns  the  number  of 
running  feet  of  “Licensed  Motion  Pictnres”  leased  by  it 
from  the  party  of  the  first  pnrt  during  that  year  hears  to  the 
total  amount  of  running  feet  of  “Licensed  Motion  Pictures” 
leased  by  it  from  all  “Patents  Company  Licensees  afore¬ 
said”  during  that  year  (“Licensed.  Motion  Pictures”  manu¬ 
factured  for  or  purchased  by  the  party  of  the  second  part, 
ns  aforesaid,  as  well  as  “Licensed  Motion  Pictures”  leased  to 
it  by  “Patents  Company  Licensees  aforesaid”  produced  from 
negatives  made' on  its  order,  to  bo  excluded). 

9.  It  is  mutually  covenanted  and  agreed  by  and  between 
the  parties  hereto  that  by  “net  profit,”  ns  used  in  the  last 
preceding  paragraph,  is  meant  moneys  remaining  after 
deducting  from  the  gross  earnings  and  income  of  the  party 
of  the  second  part  from  “Licensed  Motion  Pictures”  and 
“Licensed  Projecting  Machines”  and  from  all  other  sources, 
all  operating  expenses  connected  with '  the  business  of  the 
party  of  tlie'sccond  part. 

10.  It  is  mutually  covenanted  and  agreed  by  add  between 
the  parties  hereto' that’ the  yearly  payments  out  of : the7  bnl- 


120 


121 


ORIGINAL  PETITION,  EXHIBIT  8. 

ance  of  net  profit  provided  for  in  paragraph  hereof-  numbered 
8  may,  at  the  option  of  the  party  of  the  second  part,  be  made 
wholly  or  partly  by  promissory  notes  of  the  party  of  the  sec¬ 
ond  part  bearing  interest  at  the  rate  of  six  (6)  per  cent  per 
annum  and  each  payable  at  a  date  not  later  than  three  years 
from  the  date  on  which  the  payment  for  which  it  is  issued  is 
due;  provided,  however,  (a)  that  if,  in  any  year  it  should 
make  payments  in  this  manner  to  the  party  of  the  first  part, 
it  shall  for  that  year  make  payments  in  like  manner  to  all  of 
the  “Patents  Company  Licensees  aforesaid”  from  whom  it 
may  have  leased  “Licensed  Motion  Pictures”  during  that 
year  and  who  may  be  entitled  to  share  in  the  balance  of  net 
profit  of  that  year  provided  for  in  paragraph  hereof  num¬ 
bered  8;  (6)  that  if  in  any  year  it  should  make  such  payments 
partly  in  cash  and  partly  in  promissory  notes  the  cash  shall 
be  apportioned  among  the  several  “Patents  Company 
Licensees  aforesaid”  according  to  the  number  of  running  feet 
of  “Licensed  Motion  Pictures”  leased  by  each  during  that 
year  to  the  party  of  the  second  part,  relatively  to  the  total 
amount  of  running  feet  leased  by  all  to  the  party  of  the 
second  part  during  that  year,  and  the  notes  shall  be  appoi- 
tioned  in  like  manner;  and  (c)  that  all  notes  issued  by  it  in 
™  „3’.enr.t“  the  several  "Patents  Company  Licensees  afore¬ 
said  in  full  or  partial  payment  as  aforesaid  shall  be  alike 
as  to  form,  date,  rate  of  interest,  duration  and  place  of 
payment;  shall  be  paid  by  it  without  preference  to  one 
payee  over  another;  shall  bo  fully  paid  by  it  before  any  cash 

ComTnuv  °  J  ifc  in  subso<luent  years  to  “Patents 

Company  Licensees  aforesaid”  on  account  of  their  share  as  ' 

naidTf  bala“Ce  °f  Det  P1'°flt  f0r  S,lch  yeai'8:  «>'all  be 

paid  before  any  payment  is  made  on  the  notes  issued  in 

alL8}U1»Seqnen  y<3arS  t0  "Patents  Company  Licensees 
muflT  s  “count  of  ««ch  share  of  the  balance  of  net 
profit,  and  shall  share  pro  rata,  according  to  their  respective 
face  values  in  any  money  to  be  used  by  it  for  nmking  p  r 
tial  payments  on  such  notes.  h  P 

14  *s  further  mutually  covenanted  and  agreed  by  and 
asdierainnft  pait  es  be^oto  that,  unless  previous*  termLted 
after  provided,  this  agreement  shall  continue  until 


-■\Xf  ORIGINAL  PETITION,  EXHIBIT  8. 

August  2G,  1019,  tile  date  of  expiration  of  the  letters  patent 
^ aforesaid  No.  707034. 

12>  14  is  further  mutually  covenanted  and  agreed  that  if 
tll,!  ,icense  to  the  party  of  the  first  part  referred  to  in  para- 
graph  hereof  numbered  2  be  terminated  prior  to  August  26, 
1919»  t,le  date  of  “Piration  of  said  letters  patent  No.  707934, 

I*”)  or  if  the  license  aforesaid  to  the  party  of  the  second  part  to 
lease  “Licensed  Motion  Pictures”  from  the  party  of  the  first 
part  and  other  “Patents  Company  Licensees  aforesaid”  be 
terminated  prior  to  August  26,  1919,  the  date  of  the  expira¬ 
tion  of  said  letters  patent  No.  707934,  then  and  in  either  of 
such  cases  this  agreement  shall  at  once  terminate. 

13.  It  is  further  mutually  covenanted  and  agreed  by  and 
between  the  parties  hereto  that  if  either  party  should  know¬ 
ingly  or  through  gross  neglect  or  carelessness  be  guilty  of  a 
breach,  violation,  or  nonperformance  of  its  covenants,  con¬ 
ditions,  and  stipulations  resulting  in  substantial  injury  to  the 
other  party,  and  should,  for  the  period  of  forty  (40)  days 
after  notice  thereof  from  the  other  party,  persist  therein  or 
fail  to  correct,  repair,  or  remedy  the  same,  then  and  in  such 
case  the  party  aggrieved  may  terminate  this  agreement  by 
giving  notice  in  writing  to  the  guilty  party  of  its  intention 
so  to  do;  it  being,  however,  mutually  covenanted  and  agreed 
by  and  between  the  parties  hereto  that  if  the  guilty  party 
should  correct,  repair,  or  remedy  such  breach,  violation,  or 
nonperformance  of  its  covenants,  conditions,  and'  stipulations 
within  the  said  period  of  forty  (40)  days  nfter  such  notice, 
and  should  thereafter  knowingly,  or  through-  gross  neglect  or 
carelessness  bo  guilty  of  a  second  breach;  violation,  or  non¬ 
performance  of  its  covenants,  conditions,  and  stipulations, 
resulting  in  substantial  injury  to  the  other  party,  then  and 
in  such  case  the  party  aggrieved  may  terminate  this  agree¬ 
ment,  by  giving  thirty  (30)  days’  notice  in  writing  to  the  guilty 
party  of  its  intention  so  to  do.  Snell  termination  of  the 
agreement,  however,  shall  not  prejudice  either  party  hereto 
in  the  recovery  of  damngos  because  of  any  such’  breach, 
violation,  or  nonperformance  by  the  other  party  hereto. 

14.  It  is  further  mutually  covenanted  and  agreed  that 
in  case  of  the  termination  of  this  agreement  as  provided 


122 


ORIGINAL  PETITION,  EXHIBIT  8. 


for  in  paragraphs  hereof  numbered  12  and  13,  or  in  case  the 
party  of  the  first  part  should  become  bankrupt,  then  at  the 
end  of  the  year  in  which  either  of  these  events  occurs  the 
party  of  the  first  part  shall  he  entitled  to  such  a  propor¬ 
tion  of  the  balance  of  net  profit  for  that  year,  ns  herein¬ 
before  defined,  as  the  number  of  running  feet  of  “licensed 
Motion  Pictures”  leased  by  the  party  of  the  second  part 
from  it  during  that  year  hears  to  the  total  amount  of  run¬ 
ning  feet  of  “Licensed  Motion  Pictures”  leased  by  the 
party  of  the  second  part  from  all  “Patents  Company 
Licensees  aforesaid”  during  that  year  (“Licensed  Motion 
Pictures”  manufactured  for  or  purchased  by  the  party  of 
the  second  part,  as  aforesaid,  as  well  as  motion  pictures 
leased  to  it  by  “Patents  Company  Licensees  aforesaid” 
produced  from  negatives  made  on  its  order,  to  be  excluded). 

15.  All  notices  provided  for  in  this  agreement  shall 
he  in  writing,  and  shall  be  given  by  delivering  the  same  to 
the  party  of  the  first  part  or  the  party  of  the  second  part, 
as  the  case  may  he,  or  to  an  officer  of  the  party  of  the  first 
part  or  the  party  of  the  second  part,  as  the  case  may  be, 
or  by  depositing  such  notice,  postage  prepaid,  in  any  post 
office  of  the  United  States,  in  a  sealed  envelope  directed 
to  the  party  of  the  first  part  or  the  party  of  the  second  part, 
as  the  case  may  be,  at  its  last  known  post-office  address, 
to  be  forwarded  by  registered  mail. 

,  10.  It  is  further  mutually  covenanted  and  agreed  by 

land  between  the  parties  hereto  that  any  rights  hereby 
jgranted  by  one  party  to  the  other  are  personal  to  and 
nonassignable  by  the  latter  without  the  consent  in  writing 
(of  the  former. 

In  witness  whereof,  the  parties  hereto  have  caused  this 
agreement  to  be  executed  by  their  officers  duly  authorized 
to  perform  these  acts,  the  day  and  year  first  above  written. 

Edison  Manufacturing  Company, 
By  Frank  L.  Dyer,  Vice  President. 

In  the  presence  of — 


,T.  J.  Kennedy, 
Wm.  Pblzer, 


Exhibit  9. 

Reissued  Letters  Patent  12192. 


United  States  Patent  Office. 

THOMAS  A.  EDISON,  OF  LLEWELLYN  PARK,  NEW 
JERSEY. 


To  all  whom  it,  may  concern-. 

Be  it  known  that  I,  Thomas  A.  Edison,  a  citizen  of  the 
United  States,  residing  at  Llewellyn  Park,  in  the  county  of 
Essex  and  State  of  New  Jersey,  have  invented  a  certain  new 
and  useful  Improvement  in  Kinetoscopic  Films  (Case  No. 
928),  of  which  the  following  is  a  specification. 

The  purpose  I  have  in  view  is  to  produce  pictures  repre¬ 
senting  objects  in  motion  throughout  an  extended  period  of 
time  which  may  be  utilized  to  exhibit  the  scene  including 
such  moving  objects  in  a  perfect  and  natural  manner  by 
means  of  a  suitable  exhibiting  apparatus,  such  as  that 
described  in  an  application  filed  simultaneously  herewith 
(Patent  No.  493420,  dated  March  14,  1893).  I  have  found 
that  it  is  possible  to  accomplish  this  end  by  means  of  pho¬ 
tography. 

In  carrying  out  my  invention  I  employ  an  apparatus  for 
effecting  by  photography  a  representation  suitable  for  repro¬ 
duction  of  a  scene  including  a  moving  object  or  ■  objects 
comprising  a  means,  such  as  a  single  camera,  for  intermit¬ 
tently  projecting  at  such  rapid  rate  as  to  result  in  persistence 
of  vision  images  of  successive  positions  of  the  object  or 
objects  in  motion  as  observed  from  a  fixed  and  single  point 
of  view,  a  sensitized  tape-like  film,  and  a  means  for  so  moving 


124 


ORIGINAL  PETITION,  EXHIBIT  9. 


ORIGINAL  PETITION,  EXHIBIT  9. 


125 


the  film  as  to  cause  the  successive  images  to  be  received 
thereon  separately  and  in  single-line  sequence.  The  move¬ 
ments  of  the  tape-film  are  intermittent,  and  it  is  perferablc 
that  the  periods  of  rest  of  the  film  should  be  longer  than  the 
periods  of  movement.  ....  . 

By  taking  the  photographs  at  a  rate  sufficiently  high  as  to 
result  in  persistence  of  vision  the  developed  photography 
will,  when  brought  successively  into  view  by  an  exhibiting 
apparatus,  reproduce  the  movements  faithfully  and  naturally. 

I  have  been  able  to  take  with  a  single  camera  and  a  tape- 
film  as  many  as  forty-six  photographs  per  second,  each  hav- 
inc  a  size  measured  lengthwise  of  tlie  tape  of  one  inch,  and  I 
have  also  been  able  to  hold  the  tape  at  rest  for  nine-tenths 
of  the  time;  hut  I  do  not  wish  to  limit  the  scope  of  my 
invention  to  this  high  rate  of  speed  nor  to  this  great  dis¬ 
proportion  between  the  periods  of  rest  and  the  periods  of 
motion,  since  with  some  subjects  a  speed  as  low  as  thirty 
pictures  per  second  or  even  lower  is  sufficient,  and  while  it 
is  desirable  to  make  the  periods  of  rest  as  much  longer  than 
the  periods  of  motion  as  possible  any  excess  of  the  periods  of 
rest  over  the  periods  of  motion  is  advantageous. 

In  the  accompanying  drawings,  forming  a  part  hereof, 
Figure  1  is  a  plan  view,  with  the  top  of  the  casing  removed, 
of  a  form  of  apparatus  which  I  have  found  highly  useful  for 
the  taking  of  the  photographs.  Fig.  2  is  a  vertical  longi¬ 
tudinal  section  on  line  ®  ©  in  Fig.  1.  Figs.  3  and  4  arc 
enlarged  views  of  the  stop  mechanism  of  the  photographing 
apparatus.  Fig.  5  is  a  plan  view  of  the  shutter  for  the 
photographing  apparatus,  and  Fig.  G  is  a  perspective  view 
of  a  section  of  the  tape-film  with  the  photographs  thereon. 

Referring  to  the  drawings,  3  indicates  the  transparent  or 
translucent  tape-film,  which  before  the  apparatus  is  put  in 
operation  is  all  coiled  on  a  reel  in  the  sheet-metal  box  or 
case  1,  the  free  end  being  connected  to  an  empty  reel  in  the 
case  2.  The  film  3  is  preferably  of  sufficient  width  to  admit 
the  taking  of  pictures  one  inch  in  diameter  between  the  rows 
of  holes  4,  Figs.  2  and  G,  arranged  at  regular  intervals  along 
the  two  edges  of  the  film,  and  into  which  holes  the  teeth  of 


the  wheels  5,  Figs.  1  and  2,  enter  for  the  purpose  of  posi¬ 
tively  advancing  the  film.  When  the  film  is  narrow,  it  is 
not  essential  to-  use  two  rows  of  perforations  and  two  feed- 
wheels,  one  feed-wheel  being  sufficient.  Said  wheels  are 
mounted  on  a  shaft  G,  which  carries  a  loose  pulley  7 — that  is, 
a  pulley  frictionally  connected  to  its  shaft  and  forming  a 
yielding  mechanical  connection.  This  pulley  is  driven  by  a 
cord  or  belt  8  from  a  pulley  9  on  the  shaft  10,  which  shaft 
is  driven  by  means  of  the  beveled  gears  11  12.  The  wheel 
12  is  preferably  driven  by  an  electric  motor  13,  which  when 
the  apparatus  is  in  use  is  regulated  to  run  at  the  desired 
uniform  speed,  being  controlled  by  the  centrifugal  governor 
14  and  the  circuit-controller  15  in  a  well-known  manner.  On 
the  shaft  10  is  another  pulley  1G,  which  is  connected  by  a 
cross-belt  17  to  a  pulley  18,  also  frictionally  connected  to  its 
shaft,  and  which  carries  the  reel  to  which  the  tape  is  con¬ 
nected  in  casing  2.  The  film  passes  from  the  casing  1  through 
a  slit  formed  by  the  edge  19  and  the  sliding  door  20,  which  is 
normally  thrown  forward  by  the  spring  21,  Fig.  2,  with  suffi¬ 
cient  force  to  clamp  the  film  and  hold  it  from  movement. 
When  the  door  20  is  retracted  by  pulling  on  the  rod  or  string 
22,  which  is  connected  to  the  arm  22',  the  film  is  liberated 
and  allowed  to  advance.  Film-case  2  is  provided  with  a 
similar  door,  but  the  device  for  moving  the  door  is  not 
illustrated.  This  arrangement  of  the  sliding  door  not  only 
holds  the  film,  but  it  tightly  closes  the  casing,  thus  excluding 
light  and  protecting  the  sensitive  film.  The  casings  or 
boxes  1  2  are  removable,  so  that  they,  with  the  inclosed  film, 
may  be  taken  bodily  from  the  apparatus;  The  shaft  G,  here¬ 
tofore  referred  to,  is  provided  with  a  detent  or  stop-wheel  23, 
the  form  of  which  is  most  clearly  shown  in  Figs,  3  and  4. 
Tlie  wheel  23  -is  provided  with  a  number  of  projecting  teeth 
24,.  six  being  shown,  which  teeth  are  adapted  to  strike  suc¬ 
cessively  against  the  face  of  the  cooperating  detent  or  stop- 
wheel  25  on  the  shaft  2G,  which  is  the  armature-shaft  of  the 
motor  or  a  shaft  which  is  constantly  driven  by  the  motor. 
The  wheel  25  has  a  corresponding  number  of  notches  27  at 
regular  intervals  around  its  periphery.  These  notches  are 


120  ORIGINAL  PETITION,  EXHIBIT  9. 

of  such  size  and  shape  that  the  teeth  24  can  pa**  through 
them,  and  when  the  wheels  23  and  25  are  rotated  I«»  tIie  rirec- 
tion  indicated  by  the  arrows  each  tooth  in  g„cce0ston  will 
strike  the  face  of  wheel  25,  thereby  bringing  [jle  film  abso¬ 
lutely  to  rest  at  the  same  moment  that  an  opening  in  the 
shutter  exposes  the  film,  and  will  then  pass  tlu*0Uj.t*  a  notch* 
allowing  the  tape-film  to  be  moved  forward  n)|0tlier  step 
while  it  is  covered  by  the  shutter.  To  avoid  t|le  danger  of 
the  wheel  25  moving  so  quickly  that  a  tootli  cnnnot  enter 
the  proper  notch,  a  laterally-projecting  tool),  is  pro¬ 
vided  adjacent  to  each  notch.  When  a  tooth  2iT  stri1'03  a 
tooth  24,  the  latter  tooth  will  be  guided  by  the  (noth  29  into 
the  adjacent  notch  27. 

30  is  a  detent  spring  or  pawl  to  prevent  hnckwfl™!  move¬ 
ment  of  the  wheel  23. 

I  prefer  to  so  proportion  the  parts  above  described  that 
the  wheel  23  is  at  rest  for  nine-tenths  of  the  tiine  [,i  order  to 
give  to  the  sensitized  film  as  long  an  exposure  88  practicable 
and  is  moving  forward  one-tenth  of  the  time  and  said 
forward  movement  is  made  to  take  place  thirty  or’  „iore  times 
per  second,  preferably  at  least  as  high  as  forty.8,x  times  per 
second,  although  the  rapidity  of  movement  or  „ timber  of 
time's  per  second  may  be  regulated  as  desired  (0  give  satis¬ 
factory  results.  The  longer  interval  of  rest  of  thc  gjln  insures 
a  good  impression  of  the  object  projected  o, croon  and 
results  in  a  picture  having  clean  and  sharp  ljne|l  since  the 
film  has  sufficient  time  to  become  steady  and  Ovcrcome  the 
vibration  caused  by  the  sudden  and  rapid  motion*  of  the 
feed  mechanism.  On  the  shaft  26  or  on  any  RuIt(1ble  shaft 
driven  by  the  motor  is  a  revolving  disk  31,  serving  as  a 
sliutter  for  alternately  exposing  and  covering  »  sensitive 
film.  This  disk,  which  is  continuously  revolving  i«  provided 
with  six  or  any  other  suitable  number  of  aimj.tlircs  32  at 
regular  intervals  around  it  near  the  edge,  thcv  bring  so 
arranged  that  one  of  the  apertures  passes  direc(tl«'  between 
the  camera-lens  33  and  the  film  each' time  the  (l])n  j*  brought 
to  rest,  the  light-rays  passing  through  the  oponin£r  33'  and 
falling  on  the  film  half-way  between  the  reels  0n  «-liich  the 
film  is  wound.  1 


ORIGINAL  PETITION,  EXHIBIT  9.  127 

34  is  a  device  for  adjusting  the  camera-lens  toward  or 
from  the  film,  and  35  is  a  device  by  means  of  which  the  opera¬ 
tor  can  focus  the  camera  on  thc  object  to  be  photographed. 

Although  the  operation  has  been  partially  indicated  in  the 
description  of  the  apparatus,  it  will  now  be  set  forth  more  in 
detail. 

The  apparatus  is  first  charged  with  a  sensitive  tape-film 
several  hundred  or  even  thousands  of  feet  long  and  the  motor 
is  set  in  operation.  Since  the  spring  21  causes  the  door  20 
to  clamp  the  film,  as  already  described,  the  loose  pulleys  7  18 
slip  without  pulling  said  film  along;  but  when  a  moving 
object— for  example,  a  man  gesticulating— is  placed  in  the 
field  of  the  camera  and  the  handle  22  is  pulled  the  film  is 
released  and  the  pulleys  operate  to  pull  the  same  along.  At 
the  same  time  the  reel  in  case  2  is  rotated  to  wind  up  the  film, 
thus  transferring  it  from  the  reel  in  case  1  to  the  reel  in  case 
2.  This  movement  is  intermittent,  the  film  advancing  by 
very  rapid  steps,  which  are  definitely  and  positively  controlled 
by  means  of  the  peculiar  detent  or  escapement  described,  and 
a  photograph  is  taken  nfter  each  step. 

While  I  do  hot  care  to  limit  myself  to  any  particular  num¬ 
ber  of  steps,  per  second,  there  should  be  at  least  enough  so 
that  thc  eye  of  an  observer  cannot  distinguish,  or  at  least 
cannot  clearly  and  positively  distinguish,  at  a  glance  a 
difference  in  the  position  occupied  by  the  object  in  the 
successive  pictures,  ns  illustrated  in  Fig.  7.  A  less  speed  in 
taking  the  pictures  will  cause  a  trembling  or  jerky  appearance 
in  the  reproduced  picture.  When  the  movement  of  the 
object  being  photographed  lias  ceased  or  the  desired  number 
of  photographs  has  been  obtained,  the  apparatus  is  stopped. 
The  film  is  suitably  treated  for  developing  and  fixing  the 
pictures,  when  it  is  ready  for  use  in  an  exhibiting  apparatus. 
It  will  be  observed  that  all  the  photographs  on  the  film  are 
taken  through  the  same  camera-lens,  which  results  in  such 
a  uniformity  0f  photographs  as  would  be  unattainable  were 
the  photographs  taken  through  different  lenses. 

65498-12 - 17 


128 


ORIGINA 


\L  PETITION,  EXHIBIT  9. 

Wliat  1  claim  is— 

1.  An  unbroken  transparent  or  translucent  tape-like 
photographic  film  having  thereon  uniform  sharply-defined 
equidistant  photographs  of  successive  positions  of  an  object 
in  motion  as  observed  from  a  single  point  of  view  at  rapidly- 
recurring  intervals  of  time,  such  photographs  being  arranged 
in  a  continuous  straight-line  sequence,  unlimited  in  number 
save  by  the  length  of  the  film,  and  sufficient  in  number  to 
represent  the  movements  of  the  object  throughout  an 
extended  period  of  time,  substantially  as  described. 

2.  An  unbroken  transparent  or  translucent  tape-like 
photographic  film  provided  with  perforated  edges  and  having 
thereon  uniform  sharply-defined  equidistant  photographs  of 
successive  positions  of  an  object  in  motion  as  observed  from 
a  single  point  of  view  at  rapidly-recurring  intervals  of  time, 
such  photographs  being  arranged  in  a  continuous  straight- 
line  sequence,  unlimited  in  number  save  by  the  length  of  the 
film,  and  sufficient  in  number  to  represent  the  movements  of 
the  object  throughout  an  extended  period  of  time,  substan¬ 
tially  as  described. 

This  specification  signed  and  witnessed  this  15th  day  of 
December,  1903. 

Thomas  A.  Edison. 

Witnesses : 

Frank  L.  DYEn, 

Harry  G.  Waiters. 

O 


.  DISTRICT  COURT  OP  THE  UNITED  STATES 
Fob  tub  Eastbbn  District  ok  Pennsylvania. 


United  States  of  America,  j 

Petitioner,  I 

.  (  ..  No.  889. 

)  Sept.  Sess.,  1912. 

Motion  Picture  Patents  ,  Co;  ami  others,  I 
,  .  Defendants.  I 


New  York  City,  October  21st,  1013. 

Upon  application  of  counsel  for  petitioner,  counsel  for 
dcfeuduntH  consenting  thereto,  the  hearings  were  postponed 
until  10:30  o’clock  A.  M.,'  November  10th,-  1013,  to  be  re¬ 
sumed  at  Manhattan  Hotel.  ' 


' New  York  City,  November  10th,  1013. 

The  hearings  were  resumed  pursuant  to  adjournment  at 
10:30  o’clock  A.  M.,  November  10th,  1013,  at  Manhattan 
Hotel,  New  York  City. 

Present  on  behalf  of  the  Petitioner,  Hon.  Edwin 
P.  Grosvenor,  Special  Assistant  to  the  Attor¬ 
ney  General. 

J.  R.  Darling,  Esq.,  Special  Agent. 

Present  also,  Messrs.  Charles  F.  Kingsley  George 
R.  Willis  and  Fred  R.  Williams,  appearing 
:  for  Motion  Picture  Patents  Company,  Bio¬ 
graph  Company,  Jeremiah  J.  Kennedy,  Hurry 
N.  Marvin  and  Armat.  Moving  Picture  Com- 

Mr.^.I.  H.  Caldwell,  appearing  for  Wiiliam  Pelzer, 
General  Film  Company,  Thomas  A.  Edison, 
Inc.,  Kalcm  Company,  Inc.,  Melics  Manufac¬ 
turing  Company,  Patlie  Freres,  Frank  L.  Dyer, 


1550  Frank  L.  Dyer,  Direct  Examination. 

Mr.  Henry  Melville,  attorney  for  George  Kleine, 
Essanay  Film  Manufacturing  Company,  Selig 
Polyscope,  George  K.  Spoor  and  W.  N.  Selig. 

Mr.  James  J.  Allen,  appearing  for  Vitagraph 
Company  of  America,  and  Albert  E.  Smith. 

Mr.  Caldwell:  I  want  to  note  on  the  record  the 
withdrawal  of  my  firm  as  counsel  or  attorneys  for 
Gaston  Melies  and  the  Melies  Manufacturing  Com¬ 
pany. 

I  will  call  Mr.  Frank  I..  Dyer. 

Thereupon,  FRANK  L.  DYER,  the  next  witness  called 
hy  defendants,  of  lawful  age,  duly  sworn,  deposed: 

Direct  examination  by  Mr.  Caldwell: 

Q.  Where  do  you  live,  Mr.  Dyer,  and  in  what  business 
are  you  engaged?  A.  I  live  at  Montclair,  New  Jersey,  and 
am  President  of  the  General  Film  Company. 

Q.  How  long  have  you  been  the  President  of  the  Gen- 
end  Film  Company?  A.  Since  December,  1912. 

Q.  And  prior  to  December,  1912,  in  what  business  were 
you  engaged?  A.  To  July,  1908,  I  acted  as  general  counsel 
for  Mr,  Edison,  and  in  addition  my  time  was  almost  entire¬ 
ly  occupied  ns  the  executive  head  of  his  various  corpora¬ 
tions.  I  was  President  of  the  National  Phonograph  Com¬ 
pany,  a  concern  that  manufactured  and  sold  phonograph 
records  and  also  sold  phonographs;  I  was  general  manager 
of  the  Edison  Phonograph  Works,  a  concern  that  manu¬ 
factured  Edison  phonographs;  I  was  Vice-President  of  the 
Edison  Manufacturing  Company,  a  concern  that  manufac¬ 
tured  and  sold  moving  picture  films  and  sold  Edison  Kinet- 
oscopes,  which  were  made  by  the  Edison  Phonograph 
Works,  and  which  also  manufactured  and  sold  Edison 
primary  batteries.  I  was  President  of  the  Edison  Busi¬ 
ness  Phonograph  Company,  a  concern  that  sold  Edison 
business  phonographs,  which  were  made  by  the  Edison 
Phonograph  Works.  I  was  President  of  the  Bates  Manu¬ 
facturing  Company,  a  concern  that  sold  the  Bates  Number¬ 
ing  Machine  made  by  the  Edison  Phonograph  Works.  I 
was  Vice-President  of  the  Edison  Storage  Battery  Com¬ 
pany,  a  concern  that  manufactured  and  sold  Edison  Storage 


4/  0 


Frank  L.  Dyer,  Direct  Examination. 


Mr.  Guosvbnok:  Of  what? 

The  Witness:  Director  of  the  Edison  Portland  Cement 
Company,  a  concern  that  manufactured  and  sold  Edison 
Portland  cement.  I  was  a  Director  of  several  of  the 
foreign  corporations,  whose  names  I  do  not  now  recall,  and 
had  the  executive  management  of  the  various  concerns 
which  sold  Edison  products  in  Great  Britain,  France,  Ger¬ 
many,  Australia  and  Argentine.  I  was  President  of  the 
Motion  Picture  Patents  Company  from  December,  190S,  to 
November,  1912,  and  I  have  been  a  Director  of  the  General 
Film  Company  since  its  formation. 

By  Mr.  Caldwell: 

Q.  Now,  prior  to  1908,  in  what  business  were  you  en¬ 
gaged?  A.  I  was  general  counsel  for  Mr.  Edison,  from 
April,  1903,  to  July,  1908,  and  organized  at  the  Edison 
Laboratory,  a  well  equipped  legal  department  that  had 
charge  of  Mr.  Edison’s  patents  and  legal  work. 

Q.  At  what  time  was  the  Edison  Manufacturing  Com¬ 
pany  succeeded  by  the  Thomas  A.  Edison  Company,  Incor¬ 
porated?  A.  I  think  it  was  March  1st,  1912,  but  it  may 
have  been  March  1st,  1911,  that,  at  my  suggestion  the 
name  of  the  National  Phonograph  Company  was  changed  to 
Thomas  A.  Edison,  Incorporated,  and  at  that  time  the  Na¬ 
tional  Phonograph  Company  acquired  the  property  of  the 
Edison  Manufacturing  Company,  the  Bates  Manufacturing 
Company  and  the  Edison  Business  Phonograph  Company. 

Q.  You  were  President,  were  you  not,  also,  of  the  Thomas 
A.  Edison  Company,  Incorporated?  ,  A.  Yes,  I  was  Presi¬ 
dent  of  the  Thomas  A.  Edison  Company,  Incorporated,  from 
tlie  time  its  name  was  changed  until  I  resigned. 

Q.  And  one  of  the  principal  businesses  of  that  company 
was  the  motion  picture  business,  was  it  not?  A.  No.  The 
principal  business  of  the  Thomas  A.  Edison  Company,  In¬ 
corporated— 

Q.  (interrupting):  1  said  one  of  the  principal  busi¬ 
nesses?  A.  The  principal  business  of  the  Thomas'  A.  Edison 
Company,  Incorporated,’ whs  the  handling  of  Edison  phono- 


V 


± 


X 


1552  Frank  L.  Dyer,  Direct  Examination. 

graphs.  That  business  was  probably  as  large  as  the. entire 
moving  picture  business  of  the  country,  but  the  business  of 
handling  moving  picture  dims  was  an  important  part  of 
its  business. 

Q.  Prior  to  1903,  you  were  cngnged  actively  in  the  prac¬ 
tice  of  patent  law,  were  you  not?  A.  I  was. 

Q.  Hnve  yon  ever  made  any  particular  study  of  the  in¬ 
dustrial  arts  in  connection  with  your  work  as  a  patent  at¬ 
torney?  A.  Yes,  I  have  always  been  interested  in  me¬ 
chanical  matters.  I  am  a  member,  or  rather,  tin  associate 
member  of  the  American  Society  of  Mechanical  Engineers, 
my  membership  in  that  society  being  based  on  my  work  as 
an  inventor. 

Q.  What  connection,  if  any;  did  you  have  with  the 
business  end  of  the  motion  picture  business  after  yon  went 
with  Mr.  Edison,  in  1008,  and  up  to  the  time  when  you  left 
him?  A.  T  had  the  executive  charge  of  the  motion  picture 
business,  and  kept  pretty  close  track- of  it  Of  course,  my 
work  was  very  general.  I  was  quite  familiar  with  the  manu¬ 
facturing  operations  and  frequently  visited  the  studio. 

Q.  You  had  occasion  also  to  frequently  visit  and  inspect 
the  so-called  manufacturing  plant  at  which  the  positives 
were  printed?  A.  Oh,  yes;  I  was  entirely  familiar,  with  the 
plant,  and  frequently  went  to  it,  and  was  consulted  about 
changes  that  were  made  from  time  to  time,  and  enlarge¬ 
ments  of  the  plant.  We  also  changed  the  process  of  develop-’ 
ing,  while  T  was  connected  with  Mr.  Edison’s  companies. 

Primarily,  the  developing  was  carried  ,  out  on  drums,  and 
later  the  so-called  ruck  system  was  introduced. 

Q.  In  your  capacity  as  Vice-President  of  the  company, 
and  subsequently,  President  of  the  Edison  Manufacturing 
Company,  having  general  supervision  of  the  business  of  the 
company,  were  you  to  some  extent  familiar  with  the  opera¬ 
tions  of  your  competitors?  A.  Yes.  I  have  visited,  the 
plants  of  a  good  many  of  our  competitors,  both  the  licensed 
manufacturers  and  the  independent  .manufacturers,  and,  r 
know  generally  that  the  manufacturing  operations  nre  about, 
the  same  in  all.  the  plants  I  hnve  visited.  I  think  the  Edison  W? 

plant- represented  a  very  good  development  of  the-art,  ; 


Frank  L.  Dyer,  Direct  Examination,  1553 

The  Witness:  By  "plant”  I  would  include  the  studio, 
and  also,  in  the  case  of  the  Edison  Company,  the  part  of 
the  factory  that  was  devoted  to  printing  and  developing 
operations. 

By  Mr.  Caldwell: 

Q.  State  what  suits  were  brought  by  Mr.  Edison  or  the 
Edison  Manufacturing  Company  on  the  patents  owned  by 
him  pertaining  to  the  motion  pioture  art,  at  any  time  prior 
to  January  1st,  1909.  You  may  commence,  if  yon  will,  with 
the  original  Letters  Patent  issued  in  1897,  was  it  not,  cover¬ 
ing  the  camera  and  film?  A.  Yes.  When  the  original 
patent  was  granted  in  1897,  suit  was  commenced  against 
the  American  Mutoscope  &  Biograpli  Company,  now  called 
the  Biograph  Company,  and  that  suit  was  very  vigorously 
prosecuted.  It  was  brought  on  to  final  hearing  before 
Judge  Wheeler,  and  Judge  Wheeler  handed  down  an  opin¬ 
ion  sustaining  the  patent  and  holding  it  to  be  infringed, 
both  as  to  the  claims  on  the  camera  and  on  the  film.  On 
appeal  to  the  Circuit  Court  of  Appeals  the  Court  held  that 
the  claims  were  too  broad;  and  therefore,  the  patent,  was 
reissued  in  two  parts,  one  covering  the  camera,  and  the 
other,  the  film.  Suits  were  also  brought  on  the  original 
patent,  as  I  remember,  against  the  Vitagrapli  Company  of 
America,  Eberhard  Schneider,  and,  I  think,  Lubin,  of  Phila¬ 
delphia.  My  recollection  is  that  an  injunction  was  secured 
under  the  original  patent  against  the  Vitagrapli  Company, 
and,  I  think  also,  against  Eherlinrd  Schneider. 

Mr.  Grosvenor:  Can  you  give  any  dates  pertain¬ 
ing  to  these  suits,  relating  to  the  suits,  ns  you  are 
testifying  very  generally,  as  I  understand? 

Mr.  Caldwell:  We  will  follow  this  up  later  with 
the  specific  dates. 

The  Witness.  I  am  not  able  to  give  exact  dates,  Mr. 
Grosvenor.  I  know  that  the  decisions  of  Judge  Wheeler, 
and  of  .the  Circuit  Court  of  Appeals,  are  printed  in  the  : 
Federal  Beporter,  but  I  do  not  remember  the  dates. 

Mr.  Grosvenor:  They  have  already  been  intro¬ 
duced  in  evidence. 


1554  Frank  L.  Dyer,  Direct  Examination. 

1  The  Witness:  I  didn’t  know  that. 

Q* 

Mr.  Grosvenor:  Can’t  you  give  the  dates  in  re¬ 
spect  to  these  other  matters  you  hare  testified  to,  for 
instance,  these  injunctions  you  have  named  in  those 
suits? 

The  Witness:  No,  I  am  not  alile  to,  except  that  it  was 
subsequent  to  the  granting  of  the  original  patent  and  be¬ 
fore  the  final  granting  of  the  reissued  patent. 

2  By  Mr.  Caldwell  : 

Q.  That  would  be  then,  approximately,  between  1807 
and.  1902?  A.  Yes.  After  the  first  two  reissued  patents 
were  granted,  suits  were  again  brought  against,  the  Bio¬ 
graph  Company,  and  I  think  also  against  the  Vitagraph 
Company,  Lnbin,  Selig,  Melies,  and  perhaps  others. 

Q.  How  about  the  Pathe  Cinematograph  Co.,  and  J.  A. 

Beret,  or  was  there  a  suit  brought  against  them?  A.  I  don’t 
recall  that,  but  I  think  so.  The  suit  against  the  Biogrnph 
Company  on  the  camera  patent  was  pressed  ns  vigorously 
8  as  possible,  and  that  suit  was  brought  on  for  final  hearing 
before  Judge  Bay,  who  held  that  while  the  claims  were 
valid,  they  were  not  infringed.  On  appeal  to  the  Circuit 
Court  of  Appeals,  the  Court  held  that  certain  claims  of 
the  camera  reissue  pntent  were  infringed  by  the  so-called 
Warwick  camera,  used  by  the  Biograph  Company,  and,  I 
think,  an  injunction  granted.  Suit  on  the  film  reissue  was 
started,  and  it  developed  that  the  defense  of  the  Biogrnph 
Company  would  be  that  the  reissue  instead  of  having  nar¬ 
rowed  the  claim  or  claims  on  the  film,  as  was  the  intention, 
actually  broadened  the  claims.  This  contention  was  bnsed 
4  on  the  fact  that  the  word  “equidistant,”  which  nppenred  in 
the  original  film  patent  claim,  did  not  appear  in  the  first 
reissue  patent  on  the  film.  This  was  a  clerical  error,  which 
was  corrected  by  reissuing  the  film  pntent  a  second  time; 
but  it  necessitated  the  dropping  of  the  suits  that  had  been  0y 

brought  on  the  first  film  reissue.  My  recollection  is  that 
these  suits,  however,  were  renewed  against  the  Biogrnph 
Company  and  the  other  infringers  on  the  second  reissued 
film  patent.  What,  date  did  you  want  me  to  go  lip  to? 


Frank  L.  Dyer,  Direct  Examination. 


1555 


Mr.  Grosvenor:  Reissued  film  patent  or  camera 
patent? 

The  Witness:  Film  patent. 

By  Mr.  Caldwell: 

Q.  You  refer  now  to  No.  12,192,  the  second  reissued  film 
patent?  A.  Yes.  What  date  did  you  want  me  to  go  up  to? 

Q.  Up  to  the  formation  of  the  Motion  Picture  Patents 
Company?  A.  With  this  date  in  mind,  I  am  certain  that 
suit  was  brought  on  the  second  film  reissue  patent  No.  12,- 
192,  against  the  Biograph  Company,  because,  that  suit  was 
being  pressed  in  December,  190S. 

Mr.  Grosvenor  :  When  was  that  suit  brought? 

The  Witness:  I  don’t  remember,  I  don’t  recall  that— 
I  know  we  were  taking  testimony  then. 

By  Mr.  Caldwell: 

Q.  Was  it  brought  shortly  after  the  second  reissue?  A. 
I  think  so;  and  a  suit  was  also  brought  on  this  second  ca¬ 
mera  patent  in  the  Summer  of  1908,  against  infringing 
theatres,  principally  in  Chicngo,  but  nothing  became  of 
this  suit. 

Mr.  Grosvenor:  Those  being  brought  in  1908? 

The  Witness:  Yes,  in  the  Summer  of  1908,  and  nothing 
became  of  this  suit,  because,  about  that  time  it  seemed  rea¬ 
sonably  certain  that  the'  differences  between  the  two  con¬ 
tending  interests  would  be  composed,  as  subsequently  was 
the  case,  resulting  in  the  formation  of  the  Motion  Picture 
Patents  Company. 

By  Mr.  Caldwell: 

■  Q.  Have  you  stated  the  result  of  the  second  suit  against 
the  Biograph  Compnny  on  the- reissue  letters  patent  affect¬ 
ing  the  camera?  A.  The  result  of  that  suit,  ns  I  recall, 
was  the  granting  of  an  injunction,  enjoining  the  Biograph 
Company  from  using  the  Warwick  camera,  which  was  a 


3650  Frank  L.  Dyer,  Direct  Examination. 

positive  feed  camera  of  the  type  now  universally  used, 
and  which  is  known  generally  as  the  Edison  camera.  I 
might  say,  concerning  this  camera  reissue  patent,  that  a 
motion  for  a  preliminary  injunction  was  argued  against  the 
Selig  Company  in  the  Fall  of  1907,  and  an  injunction 
granted,  or  at  least,  we  were  in  position  to  take  an  injunc¬ 
tion,  and  I  think  an  injunction  was  also  granted  against 
Lubin,  in  Philadelphia,  on  the  camera  reissue. 

Q.  Is  it  not  a  fact  that  Judge  Kohlsant  of  the  United 
States  Circuit  Court  in  Chicago,  handed  down  an  opinion 
directing  the  issuance  of  an  injunction  against  Selig?  A. 
That  is  so. 

Q.  Do  you  recall  the  date  of  that  decision?  A.  I  do  not, 
except  that  was  in  the  Fall  or  early  Winter  of  1907. 

Q.  Had  proceedings  for  an  accounting  been  commenced 
against  the  Biograph  Company  after  the  decision  of  the 
United  States  Circuit  Court  of  Appeals  early  in  1907?  A. 
Yes,  these  proceedings  were  being  gone  ahead  with,  and,  as 
I  remember,  were  in  charge  of  Mr.  Bull. 

Q.  Were  they  pending  at  the  time  of  . the  settlement  of 
the  so-called  warfare  between  the  Edison  and  the  Biograph 
interests?  A.  Yes. 

Q.  Do  you  recall  what  happened  in  the  suit  that  you 
brought  against  Luhin  under  the  second  camera  re-issue? 
A.  Not  specifically,  except  that  as  I  remember  it,  we  either 
had  an  injunction  against  Lnbin  or  were  in  a  position  to 
take  an  injunction. 

3Ir.  Grosvenor:  May  I  interrupt  with  a  question? 
Mr.  Caldwell,  do  T  understand  that,  yon  are  going  to 
submit  a  list  or  memorandum  witli  dates  respecting 
all  this? 

Sir.  Caldwell  :  We  expeet  to  do  that.  yes. 

Mr.  Grosvbnor:  I  suggest  that  before  you  ex¬ 
amine  the  witness  in  these  matters,  that  you  have 
that  list  ready,  so  that  lie  can  refresh  his  recollec¬ 
tion  and  we  can  proceed  more  intelligently. 

Mr.  Caldwell:  That  is  a  question  of  the  order 
of  proof.  I  think  that  it  would  be  convenient  to 
have  that  list  ready,  hut  it  does  not  happen  to  be 
ready  at  the  present  time. 

Mr.  GnosvENOn :  I  am  afraid  this  testimony  is 
going  to  be  somewhat  misleading  if  it  is  going  to  be 


Frank  L.  Dyer,  Direct  Examination.  1557 

given  by  these  general  conclusions  and  if  the  wit¬ 
ness  has  not  anything  before  him  to  refresh  liis  recol¬ 
lection. 

Mr.  Caldwell  :  I  do  not  think  so.  I  do  not  think 
the  witness  will  bo  intentionally  misleading. 


Q.  Now',  I  think  you  have  stated  that  suits  were  brought 
against  Ebcrhard  Schneider  and  the  Vitagraph  Company 
and  Melies,  Pathe  Cinematograph  Company  and  J.  A.  Berst. 
Do  you  know  what  happened  in  those  suits?  What  the  re¬ 
sult  of  them  was?  A.  Are  you  speaking  now  of  the  re-is¬ 
sue? 

Q.  The  re-issue.  A.  Those  suits  were  held  up  pending 
the  determination  of  the  Biograph  suit,  except  as  I  have 
stated,  tile  motion  for  preliminary  injunction  against 
Selig  and  possibly  also,  against  Dubin. 

Q.  After  the  decision  of  the  United  States  Court  of 
Appeals,  the  second  decision  in  the  Biograph  case,  which, 
ns  you  have  stated,  was  followed  by  the  decision  of  Judge 
Kohlsant  in  Chicago,  holding  that  the  so-called  Lumiere 
and  Selig  cameras  were  also  infringements  of  the  Edison 
camera,  what  happened? 

Mr.  Gbosvenor  :  I  object  to  this  testimony  so  far 
as  it  purports  to  give  the  conclusions  or  opinions  of 
the  Court,  the  proper  evidence  being  those  opinions; 
and  then,  I  further  object  to  this  last  question  ns 
in  my  opinion,  he  is  stating  tlmt  the  witness  1ms 
testified  to  certain  tilings,  which  it  is  my  under¬ 
standing  he  has  not  testified  to  thus  far. 

Sir.  Caldwell:  The  principal  opinion  to  which 
I  refer,  you  have  already  introduced  in  evidence. 
Tlie  opinion  of  Judge  Kohlsnnt  is,  however,  not  in 
evidence  as  yet.  We  will  put  it  in. 

By  Mr.  Caldwell: 

Q.  Well,  what  happened  in  the  Fall  of  1907,  or  Winter 
of  1907  and  1908,  Mr.  Dyer?  A.  With  the  successful  ter¬ 
mination  of  the  litigation  in  favor  of  the  Edison  camera, 
patent,  which  was  held  to  cover  all  existing  practical  mo¬ 
tion  picture  cameras — 


1558 


Frank  L.  Dyer,  Direct  Examination. 


Frank  L.  Dyer,  Direct  Examination. 


1550 


Mr.  Grosvenor  (interrupting) :  I  object  to  tliia 
as  being  merely  tbe  statement  of  the  conclusion  of 
the  witness  as  to  what  the  decision  did  hold,  and, 
therefore,  as  being  improper. 

Tbe  Witness  (continuing) :  And  since  these  cameras 
were  being  used  by  all  the  American  manufacturers  who 
had,  during  the  Edison-Biograpli  litigation,  developed  their 
enterprises,  they  realised  that  their  position  was  pre- 


Mr.  Grosvenor  (interrupting) :  I  object  to  that 
ns  improper,  stating  what  other  people  realised,  and 
then  giving  the  reason  as  in  his  judgment 

By  Mr.  Caldwell: 

Q.  Is  that  the  result  of  conversations  that  you  had  with 
the  manufacturers,  Mr.  Dyer?  A.  Yes. 

Mr.  Grosvenor:  Then,  call  the  manufacturers  to 
testify  as  to  the  reasons  that  actuated  them. 

Mr.  Caldwell:  I  think  it  is  competent  for  the 
witness  to  testify  to  general  conditions  prevailing 
at  the  time,  as  the  result  of  which,  certain  action 
was  taken. 

Mr.  Grosvenor:  He  1ms  not  qualified  to  testi¬ 
fy  as  to  what  motives  may  have  actuated  others.  I 
■  want  to  enter  my  objection.  Now,  proceed,  witness. 

The  Witness  (continuing):  Because  all  the  American 
manufacturers  realized  that  the  Edison  Company  would  be 
successful,  as  it  was  in  the  case  of  the  Selig  Company,  in' 
enjoining  them  from  the  use  of  their  cameras,  and,  there-  • 
fore,  from  making  motion  pictures  in  the  United  States, 
therefore,  all  the  American  manufacturers,  with  the  ex¬ 
ception  of  the  Biograph  Company,  came  to  the  Edison 
Company  and  received  licenses  under  the  Edison  camera 
and  film  re-issues  to  permit  them  to  lawfully  carry'  on 
their  business.  These  licenses  were  granted  in  the  early 
part  of  1908. 


Mr.  Grosvenor  :  Test  suit  of  what? 

Mr.  Caldwell  :  On  the  camera. 

Mr.  Grosvenor  :  Which  suit  are  you  referring  to 
against  the  Biograpli  Company? 

Mr.  Caldwell  :  I  am  referring  to  the  second  suit. 


A.  Well,  in  the  first  place,  the  Biogrnph  Company  al¬ 
ready  had  been  sued  under  the  original  patents,  and  we 
felt  that  it  was  up  to  us  to  test  the  re-issue  patents  in  the 
second  suit  against  them,  and  not  give  up  in  our  efforts  to 
enforce  the  rights  of  the  Edison  Company.  Then,  there 
was  also  more  or  less  personal  feeling  between  the  two  con¬ 
cerns,  a  feeling  of  bitterness,  but  principally  as  a  matter 
of  legal  tactics,  the  suit  against  the  Biograph  Company 
was  selected  os  the  test  case,  because  the  Biograph  Com¬ 
pany  was  making  use  of  two  cameras,  one  known  as  the 
Biograpli  camera,  and  the  other,  the  Warwick  camera. 
There  was  some  doubt  as  to  the  infringement  of  the  Bio¬ 
graph  camera,  but  we  felt  that  we  ought  to  proceed  against 
both,  and  then,  if  we  were  successful,  there  would  be  no 
difficulty  in  getting  preliminary  injunctions  against  other 
infringers.  Or,  if  we  were  successful  only  on  the  Warwick 
camera,  as  was  actually  the  case,  we  still  could  get  pre¬ 
liminary  injunctions  against  other  infringers.  If,  however, 
suit  had  been  brought  against  any  other  infringers,  while 
we  would  have  been  successful  in  securing  an  injunction, 
yet,  if  we  then  went  against  the ,  Biograpli  Company,  the 
question  of  the  infringement  of  the  Biograph,  camera  would  ‘ 
-  have  to  be  gone  all  over  again,  and  we  considered  that  it 
was  therefore  better  to  proceed  with  the  suit  against  the 
Biograph  Company  than  against  the  others;  in  other  words, 
it  was  the  most  unfavorable  suit. 

Q.  Was  the  Biograpli  Company  on  active  competitor  of 
the  Edison  Manufacturing  Company  at  that  time?  A.  Yes. 

Q.  Anil' its  largest  competitor  among  the  domestic  pro¬ 
ducers  of- motion  pictures?  A.  It  was. 

Q.  And  did  that  fact  have  anything  to  do  with  your 


1560  Frank  L.  Dyer,  Direct  Examination. 

selection  of  that  case  as  the  test  case?  A.  Yes.  That  was 
also  a  consideration. 

Q.  Now,  what  were  the  considerations  that  led  Mr.  Edi¬ 
son  to  conclude  to  license  these  infringers  under  his  patents 
instead  of  stopping  them  altogether? 

Mr.  GROSVHNOit:  I  object  to  this  .question  as  being 
improper  in  asking  as  to  the  reasons  that  actuated 
a  third  person  and  not  the  person  testifying.  The 
proper  way  is  to  call  the  person  respecting  whom 
the  question  is  asked. 

Mr.  Caldwell:  This  witness  at  that  time  was 
the  active  representative  of  Mr.  Edison,  who  conduct¬ 
ed  these  operations. 

Mr.  Grosvenor:  He  is  qualified  to  testify  the 
reasons  that  may  have  actuated  himself  in  giving  ad¬ 
vice,  but  certainly  he  is  not  qualified  to  testify  as 
to  Mr.  Edison. 


Q.  These  licenses 
from  Mr.  Edison,  wei 
being  fully  explained 


rare  issued  pursuant  to  instructions 
they  not,  Mr.  Dyer?  A.  Yes.  After 
to  him  and  having  been  approved  by 


The  stenographer  repeats  the  question  as  follows: 

Q.  Now,  what  were  the  considerations  that  led  Mr. 
Edison  to  conclude  to  license  these  infringers  under  his 
patents  instead  of  stopping  them  altogether?  A.  Mr.  Edi¬ 
son  wanted,  to  make  as  much  money  as  possible  out  of  his 
patents)  and  therefore,  by  these  licenses — 

Mr.  Caldwell  (interrupting) :  Before  you  pro¬ 
ceed,  Mr.  Dyer— these  patents  at  that  time  were 
owned  by  the  Edison  Manufacturing  Company,  were. 
.  they  not? 


Frank  L.  Dyer,  Direct  Examination;  1561 

By  Mr.  Caldwell  :  '  1 

Q.  That  was  a  corporation,  wasn’t  it?  A.  That  was  a 
corporation,  owned  practically  by  Mr.  Edison. 

Q.  And  you  were  the  Vice-President  of  that  corporation, 
were  yon  not?  A.  I  was. 

Q.  And  practically  charged  with  the  executive  manage¬ 
ment  of  Hint  company?  A.  Not  at  that  time.  I  was  gen¬ 
eral  counsel. 

Q.  You  were  Vice-President  of  the  company?  A,  Not  at 
that  time.  I  was  the  Vice-President,  in  July,  1908.  At  that 
time,  I  was  the  general  counsel  ndvisiug  with  Mr.  Gilmore,  2 
who  was  the  Vice-President. 

Q.  Yon  may  proceed.  A.  Mr.  Edison — 

Q.  (interrupting) :  By  Mr.  Edison,  you  mean  now  the 
Edison  Manufacturing  Company,  do  you  not?  A.  Yes.  The 
Edison  Manufacturing  Company  whs  practically  Mr.  Edi¬ 
son,  because  he  owned  nil  the  stock,  or  substantially  all  the 
stock,  of  it — wanted  to  make  ns  much  money  as  possible 
out  of  his  patents.  He  felt  this  could  be  done  only  by  li¬ 
censing  concerns  to  use  the  patents  upon  the  payment  of 
royalties.  It  was  also  felt  by  the  Edison  Manufacturing 
Company  that  the  concerns  that  were  in  business  and  that  3 
were  infringing,  had  probably  entered  the  field  without  a 
proper  knowledge  of  the  patent  situation,  ai>d  that  it  would 
be  harsh  and  oppressive  to  force  them  to  retire.  Further¬ 
more,  the  Edison  Manufacturing  Company  did  not  have 
the  faciliHes  to  supply  the  market  for  motion  picture  films 
at  that  time,  and  if  the  company  had  pressed  its  advantage 
to  its  ultimate  conclusion,  it  could  not  have  supplied  the 
motion  pictures  that  it  would  drive  out.  These,  I  think, 
were  the  principal  reasons  why  it  was  decided  to  license  in¬ 
fringers  instead  of  trying  to  close  them  up. 

Q.  Did  those  who  were  licensed  comprise  all  ot  those  4 
engaged  in  business  at  that  time,  with  two  exceptions?  A. 

Yes.  All  the  manufacturers  were  licensed  except  the  Bio¬ 
graph  Company,  and  the  only  outsider  was  Mr.  Kleine,  who 
was  an  importer  of  films,  and  who  allied  himself  with  the 
Biograph  interests. 

Q.  One  of  the  witnesses  called  by  the  petitioner  in  this 
case,  Mr.  Swaab,  has  testified  that  in  190S,  and  prior  there¬ 
to,  the  films  were  not  sold  as  patented  articles.  .  Is  that 
statement  correct  so  far  as  the  films  sold  by  Mr.  Edison  or 


1503  Frank  L.  Dyer,  Direct  Examination. 

1  tlio  Edison  Manufacturing  Company  are  concerned?  A.  No, 
it  is  not  correct,  The  Edison  films  were  stated  to  be  pat¬ 
ented,  and,  I  think,  the  date  of  the  patent  was  printed  as 
part  of  tlie  main  title  of  eacli  film,  so  that  the  patent  date 
would  be  thrown  on  the  screen  when  the  film  was  project¬ 
ed.  I  am  quite  sure  also  that  the  fact  that  the  film  was 
patented  was  extensively  advertised  by  the  Edison  Manu¬ 
facturing  Company  and  also,  that  the  fact  that  the  film 
was  patented  was  also  marked  on  the  boxes  containing 
them.  I  think  this  information  was  disseminated  ns  widely 
as  possible  by  the  Edison  Company. 

3  Q.  State  what  part,  if  any,  you  took  in  bringing  about 
the  so-called  Edison  license  arrangement  in  1008?  With 
what  manufacturers  you  conferred,  if  any,  before  the  li¬ 
cense  agreement  was  put  in  the  form  in  which  it  was  final¬ 
ly  executed.  A.  The  first  knowledge  .  I  had  specifically  of 
any  proposition  to  grant  licenses  was  early  in  1908.  Mr. 
Alexander  T.  Moore,  at  that  time  manager  of  the  ICinet- 
ograph  department  of  the  Edison  Manufacturing  Com¬ 
pany,  came  into  my  office  at  Orange,  and  handed  me  a  pro¬ 
posed  license  agreement  between  the  Edison  Company  and 
Patlie  Frores,  and  asked  me  to  look  it  over  and  advise  him 

3  if  it  was  correct  in  form.  I  took  up  this  agreement  with 
Mr.  Gilmore,  who  at  that-  time  was  Vice-President  of  the 
Ellison  Company,  and  thereafter  the  license  agreement  was 
developed  by  Mr.  Gilmore  and  myself.  I  do  not  recall  what 
the  exact  form  of  the  first  agreement  was  that  Mr.  Moore 
submitted  to  me,  or  what  suggestions  in  the  final  agree¬ 
ment  were  made  by  Sir.  Gilmore,  or  what  by  myself.  We 
wanted  to  get  an  agreement  that  would  be  acceptable  to 
Patlie  Freres,  because  that  concern  was  a  dominating  factor 
in  the  motion  picture  business  at  that  time. 

4  Q.  Commercially,  you  mean?  A.  Commercially.  And 
we  felt  that  the  contract  that  would  be  accepted  by  Patlie 
Freres  would  be  acceptable  to  the  other  proposed  licensees. 
This  work  took  place  in  the  early  part  of  1908,  and  the 
agreements  were  executed,  ns  I  remember,  in  the  Spring  of 
that  year.  The  only  manufacturer  that  I  recall  talking 
with  at  the  time  when  the  form  of  the  contract  was  being 
discussed,  was  Mr.  Berst.  I  think  I  also:  saw  some  of  the 
manufacturers  at  the  time  the  agreements  were  executed 
by  them,  but  I  do  not  recall  anyone  specifically,  except  Mr. 


Frank  L.  Dyer,  Direct  Examination.  1503 

Spoor,  who  I  remember  very  well  coming  down  to  New  York  1 
ft  for  the  purpose  of  executing  liis  license  agreement. 

Q.  You  have  stated  that  these  agreements  were  executed 
in  tiie  Spring  of  1908.  I  want  to  call  your  attention  to  the 
date  of  the  agreement  between  the  Edison  Manufacturing 
Company  and  the  Kalein  Company,  which  is  attached  to 
the  answer  of  the  Edison  Company  in  this  case,  and  which 
is  in  evidence  as  Petitioner’s  Exhibit  No.  92,  and  I  ask  you 
to  look  at  that  date  and  see  if  that  refreshes  your  memory 
as  to  the  time  when  these  license  agreements  were  executed? 

A.  Yes.  In  referring  to  the  Spring,  I  had  in  mind,  possibly 
the  1st  of  February. 

Q.  What  was  the  date  of  that  agreement?  A.  The  date 
of  this  agreement  is  the  31st  of  January,  1908. 

Q.  That  is  about  the  time  when  the  other  agreements 
were  executed,  was  it?  A.  I  think  that  is  true  of  all  the 
agreements,  except  in  the  case  of  Patlie,  and  there  was 
delay  in  executing  the  Patlie  agreement,  as  I  remember  it, 
owiug  to  the  fact  that  Mr.  Berst  stated  that  the  actual  ex¬ 
ecution  of  the  agreement  had  to  be  first  referred  to  his  prin¬ 
cipals  in  Paris.  He  stated  lie  had  not  any  doubt  that 
they  would  approve  it,  lint  lie  had  to  get  their  formal  con-  g 
sent  first,  as  I  remember  it. 

Q.  But  in  point  of  fact,  did  not  Patlie  Freres  commence 
to  operate  under  the  agreement  at  the  same  time  as  the 
other  licensees?  A.  He  did. 

Q.  All  of  these  agreements  were  substantially  uniform, 
were  they  not,  in  terms?  All  alike,  with  two  exceptions? 

A.  Yes,  sir.  They  were  all  alike,  except  that  in  the  case 
of  the  Patlie  Company  and  in  the  Melies  agreement,  there 
was  either  a  separate  agreement,  or  else  the  main  agree¬ 
ment  was  modified  to  provide  that  those  concerns  should 
be  given  the  right  to  import  foreign  negatives  from  which  4 
positive  prints  could  be  made,  and  also  to  import,  under 
certain  conditions,  foreign  made  positives.  Those  two  con¬ 
cerns  were  the  only  ones  of  the  licensees  who  bad  foreign 
_  affiliations.  The  Melies  Manufacturing  Company  were  not 

W  importing  negatives,  and  therefore,  it  was  not  necessary 

that  their  licenses  should  include  this  privilege. 

Q.  Why  were  all  of  these  agreements  made  uniform  in 
character?  A.  As  a  matter  of  business  fairness,  we  felt 
that  all  the  licensees  should  be  treated  alike.  It  was  also 
more  convenient  to  use  the  common,  form. 


15G4 


1565 


Frank  L.  Dyer,  Direct  Examination. 

Q.  When  yon  took  np  with  the  exchanges  under  the  Edi¬ 
son  regime,  the  matter  of  contracts,  were  uniform  contracts 
made  with  each  exchange?  A.  Yes,  sir. 

Q.  Why  did  you  consider  that  that  was  necessary?  A. 

Because  it  would  have  been  an  endless  task  to  have  nego¬ 
tiated  separate  agreements  with  a  large  number  of  ex¬ 
changes.  It  was  much  more  convenient  and  ranch  more 
fair  to  treat  them  all  alike. 

Q.  It  is  in  evidence  that  there  was  a  conference  or  con¬ 
vention  of  motion  picture  men,  principally  exchange  men, 
in  the  City  of  Buffalo,  early  in  1908.  Were  you  present  at 
that  conference  or  convention?  A.  I  was.  I  went  there 
witli  Mr.  Gilmore. 

Q.  Will  you  state  what  transpired  there,  so  far  as  yon 
know?  A.  That  was  a  convention  of  a  large  number  of  ex¬ 
changes.  I  think  most  of  the  exchange  men  of  the  country 
were  there ;  certainly  'the  most  important  exchange  men  were 
there.  It  was  a  meeting,  as  I  recall,  of  a  body  known  as 
the  Film  Service  Association.  At  that  meeting  I  addressed 
tiie  members  of  the  Association  and  explained  to  them  that 
the  Edison  camera  patent  had  been  sustained  in  our  suit 
against  the  Biograph  Company,  and  that  all  the  American 
manufacturers  except  the  Biograpli  Company  had  decided 
to  recognize  the  Edison  patents,  take  licenses  under  them, 
and  pay  royalties  to  the  Edison  Company,  and  that  those 
licenses  were  subject  to  certain  reasonable  conditions.  I 
stated  that  up  to  that  time  the  exchanges,  in  handling  film 
that  had  not  been  licensed  under  the  Edison  patents,  had 
infringed  those  patents  just  ns  effectively  as  if  they  had 
made  the  film  themselves,  and  that  it  was  the  purpose  of 
the  Edison  Company  to  license  exchanges  under  the  Edison 
patents,  so  that  they  could  handle  licensed  films  legitimately 
and  without  danger  of  infringement.  And  at  that  time  I 
read  or  explained  the  provisions  of  the  proposed  exchange 
license  to  the  several  exchanges,  so  that  they  would  un¬ 
derstand  it.  I  also  had  several  of  the  exchange  men  come 
np  to  me  afterwards  and  ask  questions  about  the  proposed 
exchange  license,  and  I  endeavored  to  make  it  clear  to  them  I? 

what  it  was  designed  to  cover. 

Q.  Was  any  objection  made,  so  far  ns  you  recall,  ns 
to  the  terms  of  the  exchange  license?  A.  No.  The  exchange  ' 

men  seemed  to  be  very  hopeful  that,  as  a  result  of  the  cessa¬ 
tion  of  the  warfare  between  the  conflicting  interests  and 


Frank  L.  Dyer,  Direct  Examination. 

the  licensing  of  the  industry,  that  conditions  would  irn- 
#  prove,  so  far  as  their  business  was  concerned.  I  think  that 

they  generally  approved  the  exchange  license,  and  I  do  not 
recall  that  any  of  them  objected  to  it. 

Q.  Did  any  of  them  express  any  fear  that  the  exchnnge 
business,  if  conducted  under  the  conditions  that  had  been 
prevailing  theretofore — that  it  would  not  last  long?  A. 
That  feeling  seemed  to  be  in  the  atmosphere. 

Q.  Do  you  recall,  Mr.  Dyer,  a  provision  in  the  license 
exchnnge  agreement  between  the  Motion  Picture  Patents 
Company  and  the  exchange,  by  which  the  exchnnge  is  ob¬ 
ligated  to  lease  a  minimum  of  twenty-five  hundred  dollars’ 
worth  of  film  per  month?  Do  you  know  what  the  origin 
of  that  provision  was?  A.  Yes,  I  think  the  origin  of  that 
prevision  was  one  of  the  rules  of  the  Film  Service  Associa¬ 
tion  that  the  exchanges  had  imposed  upon  themselves,  pro¬ 
viding  that  no  exchange  should  be  a  member  of  the  Asso¬ 
ciation  unless  it  purchased  twelve  hundred  dollars’  worth 
of  film  per  month. 

Q.  I  call  your  attention  to  Petitioner’s  Exhibit  No.  2, 
page  527  of  the  record,  which  is  Article  II  of  the  by-laws 
of  tiie  Film  Service  Association,  and  ask  you  to  read  Sec¬ 
tions  2  and  3  of  those  by-laws,  and  see  if  that  is  what  you 
are  referring  to  ns  the  self-imposed  condition  by  the  ex¬ 
change  men. 

Mr.  Grosvbnor:  I  object  to  all  this  ns  immaterial. 

A.  Yes,  sir.  The  two  sections  rend  ns  follows: 

“Section  2.  For  the  purpose  of  membership  in 
this  Association  a  ‘legitimate  film-renting  business’ 
shall  be .  one  equipped  to  do  a  self-sustaining  film- 
renting  business  independent  of  any  other  office  or . 
concern,  that  purchases  new  film  for  renting  pur¬ 
poses  to  the  average  amount  of  at  least  $1,200  per 
month. 

'w)  “Section  3.  Any  eligible  individual,  partnership 

or  corporation  desiring  to  become  a  member  of  this 
Association  shall  sign  a  written  application  for  mem¬ 
bership,  stating  the  name' and  office  address  of  the 
applicant,  the  names  of  the  partners,  the  names  of 
tiie  officers  or  directors,  if  a  corporation,  and  the 


1506 


Frank  L.  Dyer,  Direct  Examination. 


Frank  L.  Dyer,  Direct  Examination. 


1567 


name  of  the  person  who  will  represent  the  member¬ 
ship  in  the  Association  in  the  case  of  a  partnership  0 

or  corporation,  that  in  how  many,  if  any,  moving 
picture  shows  the  applicant  is  interested,  either  di¬ 
rectly  or  indirectly,  and  the  names  under  which  they 
are  operated,  and  whether  the  applicant  will,  if 
elected  to  membership,  give  a  pledge  not  to  rent  film 
to  any  person  or  persons  whom  the  applicant  knows 
to  be  re-renting  it.” 

This  is  the  lmsis  of  my  previous  answer. 

Ily  Mr.  Caldwell: 

Q.  After  the  formation  of  the  Patents  Company,  the 
minimum  requirement  was  changed  from  $1,200  to  $2,500, 
was  it  not?  A.  Yes,  sir. 

Q.  And  can  you  assign  any  reason  why  the  minimum 
was  increased  under  tiie  Patents  Company  licensing  ar¬ 
rangement?  A.  My  recollection  is  that  this  increase  was 
made  at  the  suggestion  and  request,  of  tiie  exchange  men 
themselves,  who  represented  to  ns  that  at  that  time  the 
exchange  that  did  a  smaller  business  than  $2,500  per  month 
in  the  purchase  of  films,  would  not  be  self-sustaining,  and 
therefore,  would  he  open  to  the  teriiptation  of  objectionable 
practices,  particularly  duping,  which  was  a  common  prac¬ 
tice  at  that  time.  I  know  that  there  were  at  least  three 
good  sized  duping  plants  in  Chicago,  Philadelphia  and  San 
Francisco,  that  I  was  informed  were  doing  a  prosperous 
business.  Duping  was  a  great  vice. 

Q.  Could  an  exchange  satisfactorily  serve  its  custo¬ 
mers  if  it  took  less  than  that  amount  of  film  per  month?  A. 

I  do  not  think  so. 

Q.  Did  the  Edison  Manufacturing  Company,  or,  as  far 
as  you  know,  any  other  manufacturer,  have  nnything  to  do 
with  the  preparation  of  tiie  by-laws  of  the  Film  Service 
Association?  A.  No,  sir. 

Q.  Was  the  Edison  Company  a  member  of  the  Film  Serv-  ry 

ice' Association?  A.  No,  sir. 

Q.  Do  you  know  whether  any  of  the  other  mnnufac-  , 
turers  were  members?  A.  I  don’t  know  personally,  but 
there  were  some  manufacturers,  namely,  the  Vitagrapli 
Company,  Babin,  and  Spoor,  who  were  interested  in  the 


exchange  business,  and  it  is  probable  that  those  manufac- 
0  turers  or  individuals  connected  with  them,  were  members  of 

the  Association.  I  am  quite  sure  that  Mr.  Rock  was  a  mem¬ 
ber  of  the  Association,  representing  the  Vitagrapli  Com¬ 
pany.  I  would  like  to  say,  however,  that  the  Vitagrapli 
Company  of  America,  which  is  essentially  a  producing  con¬ 
cern,  was  different  from  the  American  Vitagrapli  Company, 
which  was  the  exchange  concern.  They  were  two  corpora¬ 
tions,  but  the  trade  frequently  confused  them. 

Mr.  Grosvbnor:  They  were  owned  by  the  same 
people? 

The  Witness:  By  practically  the  same  people,  yes,  sir. 
By  Mr.  Caldwell:  ■ 

Q.  Mr.  Swanson,  a  witness  called  on  behalf  of  the 
Government,  lias  testified  that  all  of  the  manufacturers 
were  members.  Then  that  statement  is  inaccurate?  A. 
Absolutely. 

Q.  I  show  you  Petitioner’s  Exhibit  No.  92,  introduced 
in  evidence  on  page  368  of  the  record,  but  not  copied  in 
the  record,  but  identified  ns  the  exhibit  attached  to  the 
answer  of  Thomas  A.  Edison,  Incorporated,  and  the  same 
being  the  license  agreement  between  the  Edison  Manufac¬ 
turing  Company  and  the  Knlem  Company,  dated  January 
31st,  1908.  Do  you  identify  that  as  one  of  several  similar 
agreements  executed  between  the  Edison  Manufacturing 
Company  on  the  one  side,  and  certain  other  persons  ns  li¬ 
censees?  A.  Yes,  sir. 

Q.  With  what  other  persons  were  similar  agreements  en¬ 
tered  into  at  or  about  that  time?  A.  S.  Lubin  of  Phila¬ 
delphia,  later  known  as  the  Lubin  Manufacturing  Company; 
the  Essanay  Company  of  Chicago,  Selig  Polyscope  Com¬ 
pany  of  Chicago,  Pathe  Freres,  the  Vitagrapli  Company;  and 
George  and  Gaston  Melies.  In  the  case  of  the  Pathe  and 
a  Melies  licenses,  they  were  the  same,  except  that  they  pro- 

.  vided.  us  I  have  before  explained,  for  the  importation  of 

foreign  negatives  and  the  printing  of  positives  in  this  coun¬ 
try,  but  whether  this  clinnge  was  in  the  agreement  itself 
or  the  subject  of  a  supplemental  agreement,  I  do  not  now 


1508  Frank  L.  Dyer,  Direct  Examination. 

Q.  At  tlie  time  these  agreements  were  entered  into,  the 
Edison  Manufacturing  Company,  the  licensor,  was  itself  Q 

actively  engaged  in  the  production  of  motion  pictures,  was 
it  not?  A.  Yes,  it  was  one  of  the  largest  producers. 

Q.  And  was  it  in  active  competition  with  these  seven 
persons  and  corporations  that  you  have  just  named?  A. 

Yes,  sir.  Did  I  name  seven?  Did  I  have  all  of  them? 

Q.  I  think  you  have  named  seven.  And  after  the  execu¬ 
tion  of  these  agreements,  it  continued  in  the  business  of 
manufacturing  motion  pictures,  did  it  not?  A.  Oh,  yes. 

Q.  And  in  active  competition  with  the  seven  licensees? 

A.  Yes,  it  was  in  active  competition  and  developing  all  the 

Q.  So  that  at.  the  time  these  agreements  were  executed, 
the  Edison  Company  sustained  a  dual  relation,  did  it  not,  to 
the  subject  matter  of  these  agreements?  A.  Yes. 

Q.  What  was  that  relation?  A.  The  Edison  Company,  in 
the  first  place,  was  the  owner  of  the  dominating  patents  and 
occupied  the  position  of  the  licensor  with  respect  to  the 
several  licensees,  and  also  was  a  manufacturer  or  producer  of 
motion  pictures,  and  therefore  occupied  the  relation  of  com¬ 
petitor  with  its  own  licensees. 

Q.  Did  all  of  these  agreements  subject  the  licensor,  that 
is  to  say,  the  Edison  Manufacturing  Company,  to  the  same 
terms  and  conditions  ns  the  licensees?  A.  All  except  the 
payment  of  royalties. 

Q.  The  value  of  a  license  to  manufacture  and  sell  under 
a  patent  depends,  in  a  large  measure,  does  it  not,  on  the 
exclusiveness  of  the  rights  that  are  conferred,  or,  in  other 
words,  the  number  of  licenses  to  bo  issued  under  the  patent? 

A.  I  think  so.  I  think  that  is  the  general  experience  of 
patentees. 

Q.  In  negotiating  the  terms  and  conditions  of  these  li-  ■ 
censes  with  the  various  persons  who' subsequently  became  li¬ 
censees,  do  you  know  what,  if  anything,  was  said  by  any  of 
them  as  to  the  number  of  licenses'  that  were  to  be  issued? 

Mr.  Grosvhnor :  Are  you  talking  about  the  rental .  O’ 

exchange  licenses  or  the  manufacturers’  licenses? 

Mr.  Caldwell:  I  am  speaking  of  the  manufac¬ 
turers’  licenses. 

Mr.  GnosvBNon:  And  this  was  prior  to  the  for- 


Frank  L.  Dyer,  Direct  Examination.  1509 

mation  of  the  Patents  Company,  and  related  to  the 
$  period  of  the  Edison  licensees,  so  for? 

Mr.  Caldwell  :  Exactly. 

Mr.  GuosvENOn:  Thank  you. 

The  Witness:  Yes,  sir;  the  idea  was  to  confine  the  li¬ 
censes  to  those  producers  of  motion  pictures  who  were  then, 
in  business,  or  at  least  those  whom  we  knew  of,  and  not  to 
extend  the  number  ns  new  concerns  entered  the  business, 
unless  the  licensees  agreed  to  it,  or  a  majority  of  the  licen¬ 
sees. 

Q.,  Do  you  know  whether  a  license  was  offered  to  the 
Biograph  Company  and  to  George  Kleine  at  that  time?  A. 
Yes,  sir,  we  offered  a  license  to  the  Biograph  Company,  but 
they  refused  to  be  licensed. 

Q.  Then  the  disposition  of  the  Edison  Company  at  that 
time  was  to  license  the  entire  art  ns  it  was  then  known,  or 
as  it  then  existed?  A.  That  is  what  we  planned  to  do. 

Q.  But  you  could  not  agree  with  the  Biograph  Company 
and  George  Kleine  as  to  the  amount  of  royalty  to  be  paid,  is 
that  correct?  A.  That  is  the  reason  why  they  did  not  ac¬ 
cept  the  licenses  from  the  Edison  Company. 

Q.  Do  you  know  whether  or  not  any  of  the  persons  or 
corporations  who  entered  into  these  license  agreements  with 
the  Edison  Company,  contemplated  at  the  time  making  addi¬ 
tional  investments  in  their  business  nfter  obtaining  licenses? 

Mr.  Gbosvenou  :  I  object  to  that  as  immaterial. 

A.  Yes.  I  recall  very  well  that  after  the  licenses  were 
finally  executed  and  the  strain  and  stress  was  over,  that 
several  of  the  licensees,  notably  the  Vitagrapli  Company,  Mr. 
Lubin,  Mr.  Selig,  and  Mr.  Spoor,  told  me  that  they  now  felt 
.  that  they  were  in  position  to  go  ahead  with  safety  and  invest 
cupital  in  their  business,  so  as  to  develop  and  greatly  im¬ 
prove  the  character  and  tone  of  their  pictures.  The  impres- 
■  sion  I  got  from  them  was  that  they  had  not  made  any  more 

W  investments  than  were  absolutely  necessary,  because  of  the 

fear  they  had  of  losing  their  investment  as  the  result  of 
patent  suits. 

Q.  I  call  your  attention  to  the  provision  contained  in 
Paragraph  20  of  the  exhibit  which- 1  have  already  shown 
yon.  You  may  state  what  provision  there  was  in  that  para- 


Frank  L.  Dyer,  Direct  Examination. 


1571 


grnpli  ns  to  tlie  number  of  licenses  which  might  he  issued 
under  the  patents  nnd  under  what  conditions  additional 
licenses  might  he  issued.  A.  The  paragraph  in  question 
which  appeared  in  all  the  other  license  agreements,  provides 
that  in  addition  to  the  license  of  the  Edison  Company  and 
Kalem  Company,  six  other  similar  licenses  might  he  granted, 
making  a  total  of  eight. 

Q.  A  total  of  eight  licenses,  or  a  total  of  eight  manu- 
fncturers  under  the  license,  including  the  licensor?.  A. 
Making  a  total  of  seven  licensees,  and  one  licensor.  The 
agreement  provides  that  additional  licenses  might  he  granted 
by  a  plurality  vote  of  the  licensor  nnd  licensees,  based  on  the 
running  feet  of  new  subjects  issued  by  the  licensor  and 
licensees  during  the  year  preceding  the  taking  of  the  vote. 
Tlie  paragraph  also  provides  that  in  case  of  the  termination 
of  any  license,  tlie  licensor  should  hnve  a  right  to  appoint  a 
now  licensee  in  place  of  the  one  that  was  ended. 

Q.  Why  were  the  licensees  granted  a  voice  in  determin¬ 
ing  whether  or  not  additional  licenses  might  he  granted? 

Mr.  Grosvbnor:  This  questioning  refers  not  to 
the  Patents  Company  licenses,  then? 


Tlie  Witness:  No.  These  v 


■c  the  Edison  licenses. 


■  Mr.  Grosvbnor:  Thank  yon. 

The  Witness :  By  the  grant  of  these  several  licenses,  tlie 
patent  property  or  territory  was  divided  practically  into 
eight  parts,  eacli  manufacturer  having  one-eighth.  Just  exact¬ 
ly  the  same  as  in  the  case  of  an  exclusive  license,  tlie  one 
licensee  has  the  whole.  Therefore,  to  grant  an  additional 
license  or  licenses,  would  reduce  the  interest  of  each  licensee. 
Tlie  licensees  agreed  to  pay  substantial  royalties  under  the; 
patents,  based  upon  a  certain  understanding,  namely,  that 
the  number  of  licenses  should  be  limited,  and  it  seemed 
entirely  reasonable  to  me  at  the  time  and  does  so  now,  that 
they  should  have  a  right  to  decide  whether  additional  licenses 
should  be  granted.  I  doubt  very  much  if  they  would  have 
consented  to  pay  the  royalties  they  did  if  they  had  felt  that 
the  Edison  Company  could  indiscriminately  license  nnyone 
who  might  appear  in  the  field. 


0  • 


Frank  L.  Dyer,  Direct  Examination. 


Q.  Was  there  much  discussion  or  controversy  over  the 
question  as  to  the  amount  of  royal ty  to  be  paid  between  tlie 
Edison  Company  and  tlie  licensees,  prior  to  tlie  agreement? 
A.  Oil,  yes. 

Q.  Before  they  arrived  at  an  agreement?  A.  Oh,  yes,  that 
was  the  result  of  considerable  dickering  hack  nnd  forth.  We 
were  trying  to  get  as  much  as  we  could,  nnd  the  licensees 
were  trying  to  pay  as  little  ns  they  could.  That  always  hap¬ 
pens  with  license  agreements. 

Q.  I  call  your  attention  to  the  following  provision  con¬ 
tained  in  Paragraph  4  of  that  license  agreement,  namely : 
"That  the  licensor  and  licensee  will  use  exclusively  sensi¬ 
tized  film  approximately  1%  of  an  inch  or  35  millimeters  in 
width,  or  narrower,  manufactured  nnd  sold  in  the  United 
States  under  authority  from  the  licensor,  nnd  called  in  that 
license  agreement  licensed  film,  and  that  they  will  not  pur¬ 
chase  or  otherwise  acquire  or  sell  or  otherwise  dispose  of  or 
deal  in  motion  pictures  produced  on  or  by  the  use  of  any 
other  film  than  such  licensed  film,  nor  sell  nor  otherwise 
dispose  of  any  negative  motion  pictures.”  What  was  the 
purpose  of  limiting  the  licensees  to  the  use  of  film  1%  inches 
or  narrower?  A.  That  was  the  standard  width  of  motion 
picture  film,  namely,  35  millimeters,  and  we  were  dealing 
with  the  practical  existing  conditions  at  the  time.  The  pro¬ 
vision  regarding  the  use  of  narrower  film  was  put  in  the 
licenses  because  several  of  the  licensees  were  discussing  the 
possibility  of  putting  out  a  small  household  machine,  and 
we  wanted  the  license  to  include  the  handling  of  film  for 
this  purpose.  The  Patlie  Company  and  the  Edison  Company 
ns  a  matter  of  fact  did,  at  a  later  date,  put  out  machines  of 
that  type,  using  film  of  a  less  width  than  35  millimeters. 

Q.  It  was  never  intended*  or  contemplated,  however,  that 
the  so-called  household  machine  should  ever  give  exhibitions 
for  profit;  was  it?  A.  No.  The  household  machine  was 
siiiiply  a  refined  form  of  toy.  It  was  to  be  used  only  in  the 
homes.  Something  like  a  phonograph. 

Mr.  Cai-dwki.i,  :  i  think  this  might  be  a  conven¬ 
ient  time  to  stop.  I  would  like  to  examine  Air.  Dyer 
on  another  subject  now  that  I  would  not  like  to  break 


Mr.  Grosvbnor: 


had  better  have  a  little  longer 


Frank  L.  Dyer,  Direct  Examination. 

session  this  afternoon  then.  We  have  lost  about 
twenty  minutes  out  of  the  two  hours. 

The  Examiner:  Shall  we  meet  again  at  2  o’clock. 
Mr.  Caldwell  :  '2 :30,  the  usual  time. 

The  Examiner:  The  hearing  is  adjourned  until 
2:30  o’clock  this  afternoon  at  the  same  place. 


New  York  City,  November  10th,  1913. 

The  hearings  were  resumed,  pursuant  to  adjournment,  at 
2:30  o’clock  P.  M.,  November  10th,  1913,  at  aianhattan 
Hotel,  New  York  City.  . 

The  appearances  were  the  same  as  at  the  morning  session. 

Thereupon  FRANK  L.  DYER  resumed  the  stand. 

Direct  examination  continued  by  air.  Caldwell  : 

Q.  air.  Dyer,  you  have  stated  that  the  Edison  films  were 
sold  as  patented  articles  both  prior  and  subsequent  to  the 
Edison  licensing  arrangement  in  1908.  I  show  yon  a  blue 
label  with  the  following  printed  on  the  back  of  it:  “Edison 
Clear  Projecting  Film.  Subject.”  Followed  by  some  blank 
lines  on  which  to  place  the  title  of  the  picture.  “Length. ... 
Feet,”  which  is  followed  by  this  printing:  “This  film  is  made 
and  sold  under  the  Edison  Patent  No.  589,108,  dated  August 
81  1907.  Imitation  or  duplication  thereof  will  be  prosecuted. 
Manufactured  by  Edison  Mfg.  Co.,  Orange,  N.  J.,  U.  S.  A.,” 
and  I  ask  you  if  that  is  one  of  the  labels  that  was  in  common 
use  in  the  sale  of  the  Edison  film  prior  to  the  time  of  the  re¬ 
issue  of  the  film  patent?  A.  Yes.  I  recall  seeing  film  boxes 
containing  this  label  at  or  about  the  time  I  moved  down  to 
Orange,  in  April,  1903— possibly  it  was  before  that  time, 
because  I  spent  a  good  deal  of  my  time  at  the  Edison  Labora- 


-  Mr.  Caldwell  :  I  offer  it  in  evidence. 

Mr.  GnosvnNon :  I  want  to  ask  one  or  two  questions 
before  I  decide  whether  I  will  make  objection.  This 
small  round  disk  names  only  Edison  Patent  No.  589,- 
168,  dated  August  31,  1897.  Then,  I  suppose,  this 


Frank  L.  Dyer,  Direct  Examination.  1573 

label  was  used  before  the  decision  of  Judge  Wallace 
on  that  patent,  which  I  have  named,  and  before  the 
reissue,  for  the  reuson  that  no  reissues  are  named  on 
this  label? 

The  Witness :  It  was  used  apparently  before  the  reissue, 
and  after  the  date  of  ,tbe  patent.  The  patent  mentioned  on 
the  label  is  the  original  patent. 

Mt.  Gbosvenor  :  Yes,  but  it  does  not  state  the  num¬ 
bers  of  the  reissues,  or  refer  to  the  reissues,  therefore 
it  is  to  be  presumed  the  label  was  used  during  a  period 
•  antedating  the  issue  of  the  reissues? 


Mr.  Caldwell:  That  was  my  question. 

The  label  offered  is  received  in  evidence  and 
larked  “Defendants’  Exhibit  No.  105.  E.  H.” 


EDISON  CLEAR  PROJECTING  FILM. 
Subject 


Length . Feet. 

This  Film  is  made  and  sold  under  the  Edison  patent 
No.  589,168,  dated  August  31,  1897. 
Imitation  or  duplication  thereof 
will  be  prosecuted. 

Manufactured  by 


By  Mr.  Caldwell:  . 

Q.  I  show  you  another  label  with  red  printed  matter  on 
the  back,  rending  as  follows:  “Trade  Mark.  Thomas  A. 


1574. 


Frank  L.  Dyer,  Direct  Examination. 


Frank  L.  Dyer,  Direct  Examination. 


1575 


Edison.  Patented  August  31, 1897.  Eeissued  Sept.  30, 1902. 

Eeissued  Jan.  12,  1904.  No.... Length.... Feet.  Title,”  Q 

•with  a  space  for  the  title  of  the  subject,  followed  by  this 
printed  matter:  “Notice.  This  film  is  sold  subject  to  the  re¬ 
striction  that  it  shall  not  be  used  for  duplicating,  or  printing 
other  films  from  it.  Any  use  of  it  for  such  purposes  is  an  in¬ 
fringement  of  the  above  patents  under  which  it  is  made  and 
sold.  Manufactured  by  Edison  Mfg.  Co.,  Orange,  N.  J., 

D.  S.  A.,”  and  I  ask  you  if  that  is  a  form  of  label  that  was 
used  on  all  motion  pictures  sold  by  the  Edison  Manufactur¬ 
ing  Company  subsequent  to  the  dates  of  the  reissued  letters 
patent  referred  to  on  the  face  of  it,  and  up  to  the  time  of  the 
Edison  .licensing  arrangement  in  January,  1908?  A.  Yes;  ns 
I  recali,  this  is  a  label  that  was  being  used  in  connection 
with  what  was  called  “Class  A  Film.” 

Mr.  Cacdweli.  :  We  offer  that  label  in  evidence. 

The  label  offered  is  received  in  evidence  and 
marked  “Defendants’  Exhibit  No.  106.  E.  H.” 

Defendants’  Exhibit  No.  106.  E.  H. 

Trade  Mark 
THOMAS  A.  EDISON 
Patented  August  31,  1897. 

Eeissued  Sept.  30,  1902.  Eeissued  Jan.  12,  1904. 

No . . . Length . Ft. 

Title . . . . 


NOTICE 

This  film  is  sold  subject  to  the  restriction  that  it  shall  not  be 
used  for  duplicating  or  printing  other  films  from  it. 
Any  use  of  it  for  such  purposes  is  an  infringe¬ 
ment  of  the  above  patents  under  which 
it  is  made  and  sold. 

/  '  Manufactured  by 

EDISON  MFG.  CO.,  . 

Orange,  N.  J., 

U.  S.  A.  , 


By  Mr.  Caldwell: 

®  Q.  Referring  again,  Mr.  Dyer,  to  Petitioner’s  Exhibit  No.; 

92,  dated  January  31,  1908,  and  to  the  provision  contained 
in  paragraph  4,  which  provided  that  licensees  should  get  their 
raw  stock  from  the  manufacturer  named  by  the  licensor. 
What  was  the  purpose  of  confining  the  licensee  to  the  use 
of  raw  film  manufactured  and  sold  in  the  United  States 
by  a  person  or  persons  authorized  by  the  licensor?  A.  The' 
purpose  of  this  particular  provision  is  this:  The  Edison 
Company,  as  I  have  stated,  in  addition  to  being  the  owner 
of  the  patents,  and  the  licensor,  was  also  the  producer  of 
moving  pictures,  and,  therefore,  a  competitor  of  the  licensees. 
The  licensees  were  very  jealous,  apparently,  of  their  busi¬ 
ness,  and  objected  to  the  Edison  Company,  as  a  competitor, 
knowing  how  much  business  they  were  doing.  Therefore,  the 
provision  was  made  that  the  royalties  should  be  collected  by 
the  licensed  manufacturer  of  raw  film  from  the  several  li¬ 
censees,  and  turned  over  to  the  Edison  Company  in  bulk, 
without  divulging  the  amount  that  might  be  contributed  by . 
any  individual  licensee.  Furthermore,  the  Eastman  Kodak 
Company,  that  was  designated  as  the  licensed  raw  film  man¬ 
ufacturer,  was  the  manufacturer  of  the  best  film  available, 
and  we  desired  to  have  licensed  pictures  put  out  on  the  best 
possible  film  so  ns  to  gradually  improve  the  condition  of 
the  business  The  principal  reason,  however,  waB  to  devise  a 
scheme  by  which  the  royalties  could  be  collected  without 
divulging  the  amount  contributed  by  each  licensee. 

Q.  Did  the  Edison  Company  as  the  owner  of  the  patents 
have  any  special  interest  in  the  selection  of  a  high  grade  of 
raw  stock?  Did  it  have  a  separate  interest  there  ns  dis¬ 
tinguished  from  its  interest  as  a  manufacturer,  and  as  the 
owner  of  the  patents?  A.  Naturally  that  is  so,  because  onr 
idea  was  to  try  to  develop  the  business  on  a  high  plane  so 
that  it  would  be  prosperous,  and  become  larger,  and  so  that 
the  royalties  would  therefore  be  greater. 

Q.  What  was  the  purpose  of  the  prohibition  contained 
a  in  that  license  agreement  against  the  sale  of  negative  mo- 

*  turn  pictures?  A.  Is  that  in  the  same  paragraph? 

Q.  I  think  it  is.  Would  the  fact  that  the  royalty  was 
based  both  on  the  amount  of  the  film  used  in  the  negatives, 
as  well  ns  in  positives,  have  any  relation  to  that  prohibition? 
A.  I  think  that  is  so.  As  I  recnll,  the  purpose  of  this  pro- 


1576 


Frank  L.  Dyer,  Direct  Examination. 


liibition  was  to  prevent  a  licensee,  who  had  legally  manu¬ 
factured  a  negative  under  the  license,  from  disposing  of  that 
negative  to  some  one  on  the  outside  who  might  produce  posi¬ 
tive  prints  therefrom  without  paying  a  royalty.  We  con¬ 
sidered  it  desirable  in  granting  licenses  to  tie  the  camera  and 
film  patents  together,  and  prevent  any  possibility  of  the 
licensees  in  any  way  rendering  support  to  any  outside  in¬ 
fringers. 

Mr.  Ghosvenou  :  •  In  using  that  term  “film  patent” 
in  that  sentence  just  read,  are  you  referring  to  the 
patent  Eastman  had? 

The  Witness:  No,  I  am  referring  to  the  Edison  reissue 
film  patent. 

By  Mr.  Caldwell: 

Q.  Is  that  all  you  wanted  to  say  on  that  subject?  A.  Do 
you  wish  me  to  elaborate? 

Q.  No,  I  simply  wanted  to  know  whether  you  had  finished 
your  answer?  A.  Yes. 

Q.  I  call  your  attention  to  the  following  provision  in  the 
same  paragraph  of  this  agreement:  “The  Licensor  cove¬ 
nants  and  agrees,  upon  the  execution  of  this  agreement,  to 
furnish  the  licensee  with  the  name  or  names  of  the  manu¬ 
facturer,  or  manufacturers  of  such  ‘Licensed  Film’  from 
whom  the  Licensor  and  Licensee  shall  purchase  the  same, 
and  the  Licensor  agrees  also  to  keep  the  Licensee  promptly 
informed  hereafter,  from  time  to  time,  of  the  name  or  names 
of  any  other  or,  additional  manufacturer  or  manufacturers 
authorized  by  the  Licensor  to  make  such  ‘Licensed  Film’  and 
from  whom  the  same  may  he  purchased.” 

Q.  What  name  or  names  of  manufacturers  of  raw  film 
did  the  licensor  give  to  the  licensees  after  the  execution  of 
this  agreement?  A.  The  Eastman  Kodak  Company. 

Q.  Why  was  the  Eastman  Kodak  Company  selected?  A. 
It  was  known  that  the  Eastman  Kodak  Company  would  be 
selected  because  all  the  licensees  were  dealing  with  that 
company  and  getting  film  from  it.  The  Eastman  Company 
made  the  highest  type  of  film  then  known,  so  that  the  quality 
of  the  pictures  would  thereby  be  assured,  and,  at  the  same 
time,  the  Eastman  Kodak  Company  was  a  large  and  respon- 


Frank  L.  Dyer,  Direct  Examination.:  1577 

sible  concern,  and  every  one,  both  the  licensor  and  the  11- 
$  censeos,  felt  confident  that  the  confidence  required  by  the 

license  would  be  observed  by  the  Eastman  Company.  The 
Eastman  Company,  of  course,  was  not  specially  referred  to 
in  the  license  because  we  did  not  know  wlmt  the  future  would 
develop,  and  every  one  felt,  of  course,  that  if  a  new  film 
should  appear  that  was  superior  to  the  Eastman  film,  that 
such  film  ought  to  be  placed  at  the  disposal  of  the  licensees. 

Q.  Was  the  Edison  Company  in  any  way  interested  other 
than  as  you  have  already  stated  in  the  Eastman  Kodak  Com¬ 
pany?  A.  Not  at  all. 

Q.  Was  it  the  intent  of  the  agreement  to  give  the  East¬ 
man  Kodak  Company  a  monopoly  of  supplying  raw  stock? 
A.  No. 

Q.  Now,  I  call  your  attention  to  another  provision  con¬ 
tained  in  the  third  clause  of  paragraph  i  of  that  agreement, 
to  the  effect  that  the  licensor  will  exact  from  each  manu¬ 
facturer  of  raw  film  authorized  by  it  to  furnish  or  sell  such 
film  to  the  licensees,  an  agreement  in  writing  not  to  furnish 
such  motion  picture  film  to  anyone  but  the  licensor  and  its 
licensees — do  you  find  that  there?  A.  Well,  it  is  a  little  dif¬ 
ferent —  ' 

Q.  (interrupting)  I  am  not  pretending  to  quote  the  exact 
language.  A.  Yes — 

Q.  — Except  to  the  extent  of  2 Vf>  per  cent  of  the  total 
amount  of  licensed  film  of  the  width  of  1%  inches,  or  nar¬ 
rower,  supplied  by  such  manufacturer  to  the  licensor 
and  said  licensees  during  any  one  year,  which  amount  the 
manufacturer  was  authorized  to  sell  to  persons  not  engaged 
in  the  motion  picture  business,  with  the  further  exception 
tlint  the  manufacturer  might  reserve  the  right  to  manufac¬ 
ture  and  sell  sensitized  films  suitable  for  commercial  pro¬ 
duction  of  negative  and  positive  motion  pictures  of  a  width 
not  to  exceed  approximately  three-quarters  of  an  inch  to 
persons  engaged  in  the  motion  picture  business.  What  was 
the  purpose  of  prohibiting  the  manufacturer  from  selling 
film  of  tlic  standard  width  to  persons  other  than  the  lieen- 
♦  sees?  A.  Any  licensed  film  that  might  be  sold  in  this  coun¬ 

try  by  a  licensed  manufacturer  of  raw  film  for  moving  picture 
work  would  necessarily  be  used  in  an  infringing  camera,  and 
the  manufacturer  would  therefore  be  contributing  to  the 
infringement..  The  purpose  of  the  condition  was  to  minimize 


1578  Frank  L.  Dyer,  Direct  Examination. 

1  as  much  ns  possible  infringements  of  tlie  Edison  patents.  In 

a  sense  it  amounted  to  a  license  to  the  raw  film  manufacturer  “ 

under  the  Edison  patents,  or,  in  other  words,  a  license  against 
contributory  infringement.  My  recollection  is  that  this  par¬ 
ticular  provision  later  on  was  modified,  or,  at  least,  was 
not  observed  by  the  Eastman  Compnny. 

Q.  In  negotiating  your  contract  with  the  Eastman  Com¬ 
pany  was  it  pointed  out,  do  yon  know,  to  the  Enstinan  Com¬ 
pany  that  if  they  sold  this  raw  film  to  any  persons  other 
than  the  Edison  licensees  the  Eastman  Company  itself  would 
be  a  contributory  infringer  of  the  patents  of  the  Edison 

2  Company? 

Mr.  Guosvenor  :  Objected  to  as  hearsay. 

Tlie  Witness:  Yes,  that  point  was  fully  explained  to  the 
Eastman  Company. 

By  Mr.  Caldwell  : 

Q.  Yon  have  staled  that,  one  of  the  purposes  was  to 
minimise  or  lessen  tlie  danger  of  infringement.  To  what 

3  extent,  if  any,  do  you  think  it  had  that  result  in  actual  op¬ 
eration?  A.  I  am  not  able  to  say,  but  I  think  during  the 
time  the  condition  was  observed  it  reduced  infringements  to 
some  extent. 

Q.  Did  you  state  why  tlie  exception  was  made  in  this 
restriction  . to  the  extent  of  two  and  one-half  per  cent,  of  the 
raw  film  sold  by  the  Eastman  Company?  A.  Yes,  1  re¬ 
member  that  tills  point  was  brought  up  by  Mr.  Enstinan 
when  we  were  discussing  with  him  the  advisability  of  this  ■ 
condition.  He  stated  that  to  his  knowledge  there  were  a 
number  of  people  in  the  United  States  who  were  taking  up  . 

4  the  moving  picture  work,  more  or  less  in  an  amateur  way, 

for  the  purpose  of  taking  pictures  of  subjects  of  natural 
history,  etc.,  and  lie  mentioned  a  friend  of  bis  in  the  Yellow¬ 
stone  Park,  who  was  making  moving  picture  records  show¬ 
ing  the  habits  of  wild  animals.  He  stated  he  thought  it  fif) 

would  be  for  the  public  good  to  allow  this  work  to  go  on  . 

even  if  it  was  an  infringement;  mid  therefore,  this  excep¬ 
tion  was  made,  leaving  it  to  the  Edison  Compnny  to  stop 
those  infringements  if  it  saw  fit  to  do  so. 

Q.  Why  was  the  manufacturer  of  sensitized  film  . left 

\  ,  ■ff; 


Frank  L.  Dyer,  Direct  Examination.  1570 

free  to  sell  film  three-fourths  of  an  incli  in  width  or  less  to  1 
persons  engaged  in  the  motion  picture  business  other  than 
the  licensor  or  licensee?  A.  That  had  to  do  with  the  pro¬ 
posed  household  or  toy  machines  which  it  was  thought 
might  be  made,  and  all  of  which  would  use  film  of  the 
narrower  width.  We  were  dealing  in  these  agreements 
with  the  standard  film  that  had  developed  in  the  art,  and. 
could  not  very  well  tell  what  the  development  would  be  iu 
other  lines. 

Q.  I  call  your  attention  to  the  covenant  contained  in 
Paragraph  5— if  you  will  refer  to  that— not  to  “sell,  or 
otherwise  dispose  of,  or  offer  for  sale  in  the  territory  afore-  4 
said,  unexposed  positive  or  negative  licensed  film  during 
the  continuance  of  this  agreement.”  What  was  the  pur¬ 
pose  of  this  provision?  A.  The  purpose  of  that  condition 
was  to  prevent  licensees  from  securing  the  film  and  selling 
it  to  an  infringer.  I  do  not  think  there  was  any  objec¬ 
tion  to  one  licensee  selling  film  to  another  licensee,  which 
apparently  would  be  covered  by  the  condition,  although 
that  might  have  been  something  that  we  objected  to.  * 

Q.  Explain  what  is  meant  by  the  use  of  “blank  film” 
for  “leaders,”  or  “spacing,”  ns  the  term  is  used  in  this  g 

paragraph?  A.  At  the  front  of  each  picture  is  placed 
a  section  of  blank  or  colored  or  tinted  film,  to  take  up 
the  wear  which  is  greatest  at  the  end.  A  similar  piece  of 
blank  film  is  used  at  the  finish  of  the  picture  and  it  is 
called  a  “tail-piece.”  Ordinarily  when  two  or  more  pictures 
are  combined  in  a  single  reel  they  are  separated  by  a  few 
feet  of  blank  film.  Of  course,  any  tough,  flexible,  perforated 
material,  such  as  paper  or  cloth,  might  be  used  for  these 
purposes,  but  there  is  a  great  deal  of  waste  in  connection  , 
with  the  production  of  these  pictures,  both  at  the  studios, 
and  in  connection  with  the  manufacturing  operations,  so  4 
that  there  is  always  a  supply  of  blank  filin'  for  these  pur¬ 
poses. 

Q.'  What  was  the  purpose  of  the  prohibition  against  tlie 
’  sale  of  second-hand  positive  or  negative  motion  pictures, 

0  or  motion  pictures  which  have  become  used,  or  shopworn'; 

or  in  any  way  damaged?  A.  The  purpose  of  that  condi¬ 
tion  was  to  minimize  the  extent,  to  which  old  worn  out  ob¬ 
jectionable  pictures  might  appear  in  the  art.  It  was  along 
the  same  lines  as  the  condition  requiring  the  return  of 
film  after  a  certain  period  of  use.  We  felt  that  it  would  be 


15S0 


Frank  L.  Dyer,  Direct  Examination. 


Frank  D.  Dyer,  Direct  Examina 


1581 


just  ns  objectionable  to  permit  the  licensee  to  sell  old  and 
worn  out  film  as  it  would  he  to  permit  the  exchanges  to 
retain  old  and  worn  out  film  tor  use  in  service.  It  would 
he  difficult  to  place  an  exact  point  at  which  a  second-hand 
picture  might  be  objectionable,  or  not,  so  that  the  provi¬ 
sion  prohibited  all  second-hand  pictures  from  being  sold  by 
the  licensees. 

Q.  At  the  time  of  this  licensing  agreement  in  Janunry, 
1908,  was  the  use  of  old  and  worn  out  dim  quite  common, 
in  the  business?  A.  Tes,  they  were  very  common.  The 
moving  picture  art  had  developed  so.  rapidly  that  the  de¬ 
mand  was  greater  than  the  supply,  so  that  the  pictures  were 
subjected  to  terrifle  use,  and  many  of  them  were  very  old 
and  worn.  These  were  called  in  the  art  “rainstorms,” 
which  were  quite  common.  Pictures  of  this  sort  were  used 
generally  in  vaudeville  houses  as  chasers  to  drive  out 
audiences,  and  allow  new  people  to  come  in.  We  felt  sure 
that  pictures  of  this  sort  would  simply  do  harm  to  the 
business,  and  we  had  reason  to  believe  that  they  were  actu¬ 
ally  ■harmful  to  the  eye.  As  a  result  of  the  conditions  of 
this  license  agreement  and  subsequent  license  agreements 
relating  to  the  return  of  old  and  worn  ont  film,  and  pro¬ 
hibiting  the  sale  of  second-hand  film,  the  condition  of  the 
motion  picture  art  has  been  very  greatly  improved,  and  I 
doubt  if  any  motion  picture  theatre  now  would  put  up  for 
a  moment  with  the  objectionable  lilms  that  were  quite 
common  in  the  art  at  the  time  the  agreement  was  made. 

Q.  What  is  the  meaning  of  the  term  “non-lieensed  mo¬ 
tion  pictures,”  as  it  is  used  in  that  agreement?  A.  A  non- 
licensed  motion  picture  is  one  produced  or  imported  by 
anyone  not  licensed  under  the  Edison  patents. 

Q.  Now,  I  want  to  call  your  attention  to  Paragraph  G 
of  that  agreement,  which  reads  in  parts  as  follows:  “The 
licensor  and  licensee  further  mutually  covenant  and  agree 
not  to  loan,  rent  out,  sell,  or  offer  for  sale  or  otherwise 
dispose  of  in  the  territory  aforesaid,  motion  pictures  to 
anyone  purchasing  or  otherwise  obtaining,  using,  loaning, 
renting  or  selling,  or  offering  for  sale  or  otherwise  dis¬ 
posing  of  or  dealing  in  non-licensed  motion  pictures.”  Wlint 
was  the  purpose  to  be  subserved  in  prohibiting  licensees 
from  selling  to  persons  dealing  in  noh-licensed  motion  pic¬ 
tures?  A.  The  purpose  was  to  keep  the  licensees  from  giv¬ 
ing  aid,  comfort  and  support  to  infringers.  We  felt  that 


if  the  licensees  could  supply  film  to  infringers,  they  would 
thereby  support  infringers  and  give  them  better  opportunity 
to  carry  on  and  extend  their  infringing  operations. 

Q.  When  you  say,  “we  felt,”  you  mean  that  the  licensor 
felt?  A.  The  Edison  Company. 

Q  Do  yon  think  that  the  agreement  produced  that  re¬ 
sult  in  whole  or  in  part  in  its  practical  operation?  A.  I  do. 

1  think  it  minced  infringement. 

Q.  It  was  a  provision  at  least  tending  to  secure  the  patent 
owner  in  the  exclusive  enjoyment  of  his  rights  under  the 
patent,  is  that  right?  A.  That  was  the  purpose  of  it. 

Q.  Deferring  now  to  Paragraph  9  of  this  agreement, 
which  establishes  a  schedule  of  minimum  prices,  will  you 
please  state  the  reasons  which  actuated  the  licensor  and 
licensees  in  fixing  a  minimum  schedule? 

Hr.  Ghosvenor:  It  is  understood,  I  take  it,  that 
the  objections  heretofore  made  will  apply  to  all  this 
line  of  testimony,  that  these  questions  are  all  imma¬ 
terial— 

Mr.  Caldwell  (interrupting) :  I  have  not  heard 
that  objection  before. 

Mr.  GnosvENOii:  I  think  I  have  mnde  it. 

Mr.  Caldwell:  Yon  can  put  it  on  the  record  if  you 
want  to. 

Mr.  GROSVenor  :  I  will  state  it  again,  then,  in  order 
that  there  may  be  no  question,  that  I  object  to  all  this 
line  of  testimony  as  to  reasons  or  motives  that  mny 
have  actuated  any  of  these  people  in  doing  any  of  the 
acts,  on  the  ground  that  these  are  immaterial.  The 
motives  are  immaterial — whether  the  witness  is  asked 

to  testify  in  regard  to  the  motives  that  actuated  them 

in  making  the  agreements  of  January,  1908,  or  in  re¬ 
gard  to  the  motives  which  actuated  them  in  making 
subsequent  agreements,  or  any  of  the  agreements  in 
this  case. 

Mr.  Caldwell:  Inmnswer  to  that  I  will  say  that 
we  are  charged  in  the  petition  with  having  executed 
these  various  agreements  with  the  motive  of  suppress-  . 
ing  competition,  and  restricting  competition,  and  es¬ 
tablishing  a  monopoly.  If  the  purpose  which  actuated 
the  defendant  in  entering  into  these  agreements  is 
material  as  charged  in  the  petition,  it  is  clearly  com- 


Frank  L.  Dser,  Direct  Examination. 


15S3 


1582  Frank  L.  Dyer,  Direct  Examination. 

potent  tor  ns  to  bring  out  the  real  motive  which  did 
actuate  them. 

Mr.  Grosvbnor  :  That  question  lias  not  yet  arisen, 
because  all  the  testimony  today,  and  all  the  questions 
so  tar  addressed  to  the  witness,  relate  to  the  agree¬ 
ments  of  January,  1908,  which,  ns  X  recall  the  petition, 
are  not  even  referred  to  in  the  petition;  therefore  my 
objection  so  far  made  is  not  contrary  to  anything  set 
out  in  the  petition  regarding  the  purposes. 

Mr.  Caldwell  :  The  agreements  of  January,  1908, 
were  the  forerunners  of  the  agreements  of  December, 
1908,  and  I  propose  to  connect  the  two  in  such  a  way 
as  to  make  this  testimony  entirely  admissible. 

Mr.  Grosvbnor:  All  right;  go  ahead.  I  want  my 
objection  on  the  record. 

By  Mr.  Caldwell  : 

Q.  Will  you  answer  the  question?  A.  There  were  several 
reasons  why  a  minimum  price  was  established.  We  felt  that 
the  motion  picture  art  had  great  possibilities.  In  the  early 
davs,  up  practically  to  the  time  of  the  granting  of  these  li¬ 
censes,  and  even  to  a  large  extent  at  that  time,  most  of  the 
films  used-  were  exhibited  largely  because  of  their  novelty. 
Some  of  these  films  simply  showed  little  incidents  and  scenes, 
such  as  Niagara  Falls,  the  American  flag,  the  Empire  State 
Express,  waves  washing  the  shore,  and  so  forth.  Some  films 
had  been  made  that  were  more  or  less  dramatic,  like  the 
“Great  Train  Robbery”  of  the  Edison  Company,  and  a  pic¬ 
ture  called  “Personal”  by  the  Biograph  Company.  Those 
were  probably  the  two  best  known  pictures  ever  made  up  to 
that.  time.  We  felt  that  the  art  could  progress  along  the 
lines  of  the  drama,  removing  the  motion  picture  from  its  field 
merely  as  an  ephemeral  novelty,  to  a  standard  form  of  amuse¬ 
ment,’  and  we  believed  that  the  competition  between  the  pro¬ 
ducers  should  therefore  extend  along  the  line  of  quality  of 
production,  and  not  on  price.  So  that  a  producer  of  these 
pictures,  knowing  what  he  could  get  per  foot,  would  be  able 
to  put  the  greatest  possible  value  in  each  foot  or  subject. 
The  art  has  progressed  since  the  grunting  of  these  licenses 
to  a  very  remarkable  extent,  and  is  now  no  longer  merely  a 
novel  form  of  entertainment,  that  appeals  to  people  because 
of  its  novelty,  lint  is  an  assured  and  established  form  of 


amusement,  its  popularity  being  probably  greater  than  any 
other  form  of  amusement  in  the  world.  In  addition,  a  very 
important  reason  for  providing  for  a  minimum  schedule, 
as  I  recall,  ivas  the  fact  that  the  Edison  Company  occupied 
the  dual  relation  of  licensor  and  competitor,  and  it  was  felt, 
and  the  fear  was  expressed  by  the  licensees,  that  if  the  Edi¬ 
son  Company  should  receive  a  large  income  annually  in  the 
form  of  royalties,  they  would  be  placed  at  an  unfair  advan¬ 
tage  in  competing  with  the  licensees.  Therefore  a  minimum 
price  was  fixed,  which  was  designed  to  represent  a  fair  aver¬ 
age  of  prices  then  current,  so  that  any  such  unfairness  on 
the  part  of  the  Edison  Company,  should  it  choose  to  take  ad¬ 
vantage  of  its  position,  might  be  checked.  I  .  do  not  recall 
any  others.  I  may  think  of  something  later. 

Q.  Did  the  establishment  of  that  minimum  schedule  have 
any  effect  on  the  price  of  admission  paid  to  motion  pictures? 
Did  it  raise  the  price  of  admission  to  motion  pictures  in  any 
wav?  A.  No,  not  at  all.  The  usual  price  of  admission  then, 
and  at  the  present  time,  is  five  cents.  In  some  localities  the 
price  is  ten  cents  or  more  where  the  theatres  are  very  large, 
or  where  the  program  is  so  long  that  the  audience  cannot  be 
changed  often,  but  the  price  at  that  time  and  now,  or  at  least 
the  usual  price,  is  the  minimum  American  standard  of  five 
cents,  and  that  price  could  not  be  reduced,  no  matter  how 
much  cheaper  the  pictures  might  be  made,  any  more  than 
could  the  price  of  soda  water  or  beer  be  reduced  if  the  cost  of 
production  is  lessened. 

Q.  Was  it  believed  by  the  licensor  that  the  royalty  which 
it  was  to  receive  would  ultimately  be  greater  if  a  minimum 
schedule  were  established,  than  it  would  be  if  no  restriction 
were  placed  upon  the  licensees  as  to  prices?  A.  Yes,  it  was 
felt  that  unless  this  and  other  conditions  were  imposed  that 
tended  to  promote  tiie  eventual  development  of  the  business, 
the  royally  would  be  less  than  if  there  were  no  conditions. 
We,  felt  that— I  said  “we;”  I  mean  the  Edison  Company— 
that  by  trying  to  do  everything  that  we  could  within  the 
territory  of  our  patents  to  elevate  the  business  and  make  it 


i  schedule  was  binding  upon  the  Edison 


Frank  L.  Dyer,  Direct  Examination. 


1  its  position  as  a  producer  of  motion  pictures  is  concerned, 
to  all  the  conditions  and  stipulations  of  the  license  agree¬ 
ments,  except  the  payment  of  the  royalty. 

Q.  Was  each  manufacturer  left  free  to  charge  what  he 
pleased  for  his  product,  so  long  as  it  was  not  below  the 
minimum  schedule?  A.  Yes,  sir. 

Q.  Was  there  any  agreement  or  understanding  between 
the  manufacturers  on  that  question,  outside  of  the  written 
agreements?  A.  No,  sir. 

Q.  I  think  you  have  stated  that  the  minimum  price  fixed 
in  this  schedule  fairly  represented  the  average  of  the  price 

2  prevailing  nt  the  time  the  agreement  was  made.  Is  that  cor¬ 
rect?  A.  That  is  as  I  recall  it,  yes,  sir.  Some  of  the  pro¬ 
ducers  were  selling  at  a  lower  price  and  others  above  this, 
but  I  think  this  was  a  fair  average. 

Q.  Why  did  this  paragraph  of  the  agreement  provide  that 
a  new  minimum  scale  of  prices  might  be  adopted  by  a  plu¬ 
rality  vote  of  the  licensor  and  licensees,  based  upon  the  out¬ 
put,  1,000  feet  of  new  subjects,  placed  on  sale  in  the  territory 
covered  by  the  agreement?  A.  No  one  would  be  able  to  say 
that  a  fair,  reasonable  price  established  at  the  time  of  these 
agreements  might  be  fair  and  reasonable  under  different 

3  conditions.  We  felt  the  conditions  might  change,  as,  for 
example,  substantial  reductions  in  the  price  of  raw  material, 
which  would  permit  a  lower  price  in  the  finished  picture,  or 
increase  in  the  investment,  or  increase  in  the  salaries  of 
actors,  or  increase  in  the  character  of  the  pictures  required 
by  the  public,  that  would  necessitate  an  advance  of  the  mini¬ 
mum  price.  Therefore,  since  the  minimum  price  could  not 
be  fixed  immutably  for  all  time,  it  is  recognized  that  it 
should  be  subject  to  change  when  conditions  required  it.  The 
licensees  being  competitors,  of  the  Edison  Company,  would 

.  not  permit  the  Edison  Company  arbitrarily  to  change  the 
price,  because  the  Edison  Company  had  a  clear  advantage 
of  two  or  three  hundred  thousand  dollars  annually  in  roy¬ 
alties,  which  would  enable  them  to  fix  a  price  that  would  be 
unfair  to  the  licensees.  It  was  felt  therefore  that  the  licen¬ 
sees  should  participate  in  the  consideration  of  a  change  in 
price,  and  it  was  felt  that  the  vote  representing  the  relative 
size  of  the  several  licensees  would  be  a  fair  way  to  determine 
that  question.  When  I  say  relative  size;  I  do  not  mean  that 
the  relative  size  of  the  licensees  would  be  the  same  at  all 
times  as  was  the  case  when  the  license  was  issued,  because 


1585 


Frank  I*  Dyer,  Direct  Examination. 

the  particular  manner  of  taking  the  vote  was  of  such  a  char- 
<£j  actcr  that  under  competitive  conditions,  the  licensees  might 

grow  or  be  reduced  in  size,  and  their  vote  would  correspond¬ 
ingly  be  changed.  The  idea  was  to  provide  a  voting  scheme 
that  would  take  into  account  cliunges  in  the  size  of  the' 
manufacturers  under  the  stress  of  competition. 

Q.  And  those  chnuges  in  size  actually  did  take  place, 
did  they  not?  A.  They  did,  in  a  very  interesting  way.  For 
instance,  when  the  Edison  licensees  were  first  formed,  the 
Kalem  Company  had  just  been  started,  and  it  was  such  a 
small  factor  in  the  business,  that  we  debated  seriously 
whether  we  should  recognize  them  and  license  them,  but  they 
were  licensed,  and  since  the  grant  of  this  license,  the  Kalem 
Company  has  developed  in  a  very  remarkable  way  in  size  and 
in  the  character  of  its  pictures,  so  that  at  the  present  time  it 
stands  among  the  first  four  of  the  licensed  manufacturers. 
In  tlie  case  of  the  Essanay  Company,  the  situation  was  about 
the  same.  They  were  a  small,  unimportant  concern,  that 
we  thought  a  license  might  be  refused  to  without  particular 
injustice,  but  they  were  licensed,  and  have  developed  so  that 
.  they  are  a  very  large,  powerful  concern  now.  On  the  other 
hand,  the  Patlie  Company  at  that  time  was  the  predominant 
factor  of  tlie  licensed  interests,  making  much  more  film  than 
anybody  else — 

Q.  (interrupting) :  You  mean  importing  much  more  film 
than  anybody  else?  A.  Putting  out.  Importing  und  putting 
out  much  more  film  than  anybody  else,  and  apparently  set¬ 
ting  a  standard  for  all  of  us  to  follow,  und  under  competi¬ 
tive  conditions,  the  Patlie  people  have  been  pulled  down 
from  the  top,  and  instead  of  using  sixty  per  cent  of  foreign 
film  as  was  the  case  in  the  early  days,  we  are  using  only 
about  ten  per  cent.  And  there  has  been  change  in  the  rela- 
'  tive  position  of  the  Edison  Company,  and  change  in  the  po¬ 
sition  of  the  Lubin  Company.  In  fact,  there  lias  been  a 
gradual  shifting  up  and  down  of  tlie  several  concerns  that 
started  out  under  the  Edison  licenses  from  that  time  to  this. 
All  dne  to  the  efforts  on  tlie  part  of  each  to  excel  the  other 
%  and  to  try  to  get  up  above  their  competitors  if  they  could. 

'  Q.  What  is  meant  by  the  term  “new  subjects  placed  on 
sale”  as  it  is  used  in  that  paragraph?  A.  That  means  the 
negative  footage  of  released  subjects;  in  other  words,  if  a 
manufacturer  or  producer  was  releasing  four  subjects  a 
week  of  a  thousand  feet  each,  that  would  be  four  thousand 


158fi 


Frank  D.  Dyer,  Direct  Examination. 


Frank  D.  Dyer,  Direct  Examination. 


1587 


1  feet,  so  far  as  the  vote  was  concerned,  whether  ten  copies  of 

each  subject  were  disposed  of,  or  fifty  copies,  as  I  remember  Q) 

it. 

Q.  What  is  the  meaning  of  the  term  “standing  order,” 
which  we  find  in  Paragraph  10  of  this  agreement,  and 
what  was  the  purpose  of  the  requirement  timt  a  standing 
order  should  remain  in  force  for  not  less  than  thirty  con¬ 
secutive  days?  A.  A  standing  order  was  an  order  placed 
for  one  or  more  prints  of  each  subject  released  by  the  li¬ 
censee.  It  was  exactly  like  the  subscription  to  a  maga¬ 
zine,  except  that  it  could  he  cancelled  on  thirty  days’  no- 

2  tice.  It  provided  for  the  continuous  supply  of  pictures  of 
that  particular  make  under  the  order.  It  required  some 
time  to  print  up  a  number  of  copies  from  a  single  negative, 
and,  therefore,  it  was  necessary  that  time  should  be  given 
to  a  manufacturer  in  cancelling  a  standing  order,  because 
if  a  manufacturer  found  himself  with  one  or  more  prints  on 
his  hands  that  he  had  printed  up  under  the  belief  that  the 
standing  order  still  stood,  he  would  have  difficulty  in  get¬ 
ting  rid  of  them. 

Q.  Why  were  sales  for  export  not  covered  by  the  agree¬ 
ment?  A.  Because  the  patents  did  not  extend  beyond  the 
■  territory  of  the  United  States,  we  felt  that  we  could  not 
impose  conditions  on  export  sales.  Of  course,  the  films  were 
produced  in  the  United  States,  and  therefore  paid  royalty, 
but  what  happened  to  them  after  they  left  the  United  States 
we  had  no  control  over. 

Q.  What  was  the  purpose  of  the  provision  in  Paragraph 
12  as  to  special  motion  pictures,  where  it  was  agreed  be¬ 
tween  the- manufacturer  and  the  person  ordering  the  same, 
that  the  negative  should  be  the  exclusive  property  of  the 
person  ordering  it,  and  positive  prints  to  be  mnile  from 
4  time  to  time  by  the  licensees  on  the  order  of  such  person, 
the  price  being  fixed  at  ?1  per  running  foot  for  making 
'  the  negative,  and  not  less  than  fifteen  cents  per  running 
foot  for  the  positive  printed  from  it?  A.  These  special 
motion  pictures  were  something  outside  of  and  apart  from 
the  regular  business.  It  amounted  to  a  very  snmll  part  of  *3) 

the  business,  and,  I  think,  still  amounts  to  a  very  small 
part  of  tiie  business.  They  were  pictures  that  were  made 
at  the  request  of  some  outsider  for  a  special. purpose. 

Q.  By  “outsider”  yon  mean  someone  not  engaged  at  all 
in  the  motion  picture  business  in  nny  of  its  plmses?  A. 


Yes.  For  instance,  the  City  of  New  York  might  want  to 
(A  have  a  picture  taken  showing  the  Street  Cleaning  Depart¬ 

ment.  The  Navy  Department  might  want  a  picture  taken, 
showing  what  a  very  pleasant  life  the  American  sailor 
leads.  Manufacturers  require  pictures  showing  operations, 
for  the  purpose  of  impressing  their  customers.  The  Na¬ 
tional  Cash  Register  Company  has  hail  a  great  many  mo¬ 
tion  pictures  made  to  illustrate  questions  of  salesmanship. 
’These  were  special  pictures,  the  negatives  being  the  prop¬ 
erty  of  the  person  or  corporation  for  whom  the  picture  was 
made.  I  remember  the  Southern  Pacific  Railroad  Company 
had  pictures  mode  showing  the  development  of  the  Texas 
lands.  And  there  were  quite  a  good  many  of  them,  but  in 
the  aggregate,  compared  to  the  amusement  side  of  the  busi¬ 
ness,  they  amounted  to  very  little.  The  reason  these  par¬ 
ticular  conditions  were  imposed,  was  the  same  as  in  con¬ 
nection  with  the  minimum  price,  the  Edison  Compnny  being 
a  competitor,  could  have  gone  out  after  this  particular  busi¬ 
ness  and  secured  all  of  it  at  prices  tlmt  the  other  licensees 
could  not  possibly  have  met,  and  it  was  felt  that  the  price 
of  a  dollar  per  foot  was  reasonable.  That,  would  be  only 
$500  for  a  five  hundred  fdot.  subject,  which  would  involve 
sending  a  man  and  a  camera  and  an  outfit,  generally  arc 
lamps,  and  so  forth,  sometimes  to  quite  distant  points.  The 
price  of  fifteen  cents  was  made  higher  than  for  the  regular 
amusement  pictures  because  generally  not  more  than  two 
or  three  copies  were  printed  from  these  special  negatives. 
But  this  part  of  the  business  was  nlmost  inconsequential. 

Q.  I  call  your  attention  to  the  provision  contained  in 
Paragraph  17  of  this  same  agreement:  “No  sale  except  for 
export  shall  be  made  except  under  certain  terms  and  condi¬ 
tions,  one  of  which  is  that  the  purchaser  shall  return  to 
the  licensor  or  licensee,  as  the  case  m«y  be,  from  time  to 
time,  such  positive  motion  pictures  that  have  been  pur¬ 
chased,  on  the  first  day  of  every  month,  beginning  with 
August  1st,  1908,  an  amount  of  positive  motion  pictures  in 
running  feet  not  purchased  over,  six  months  before,  and 
of  the  make  of  the  licensor  or  licensee,  ns  the  case  may  lie, 
to  whom  it  is  returned,  equal  to  the  amount  that  was  so 
purchased  during  the  sixth  month  preceding  the  date  of 
such  return.”  And  I  ask  you  what  was  the  purpose  of  this 

requirement  of  the  return  of  film?  A.  The  purpose  of  this 
.  condition  was  to  require  the  return  of  old,  worn-out  nnd 


1588  Frank  L.  Dyer,  Direct  Exasiination. 

eye-impairing  film,  the  idea  being  to  improve  the  character  _ 

of  the  exhibitions.  As  I  recall,  this  particular  condition 
was  not  imposed  or  was  not  insisted  upon  or  carried  out  by 
the  Edison  Company,  under  its  license  agreements,  but  was 
later  on  embodied  in  the  agreements  with  the  Patents  Com¬ 
pany,  and  carried  out  by  that  company.  The  effect  ot  the 
condition  was  to  largely  reduce  the  number  of  these  objec¬ 
tionable  films  and  improve  the  quality  of  the  exhibition, 
and  as  the  result  of  this  improvement,  our  competitors,  in 
order  to  meet  our  competition,  are  required  to  give  ex¬ 
hibitions  of  films  in  equally  good  condition.  The  “rain¬ 
storms”  that  I  spoke  of  in  the  previous  answer,  wore  bring¬ 
ing  about  a  condition  of  disrepute,  so  that  many  people 
who  saw  motion  pictures  only  in  the  vaudeville  shows, 
looked  upon  them  as  very  tedious  and  objectionable,  in  fact, 
in  the  old  days,  generally,  the  moment  a  motion  picture  ap¬ 
peared,  everybody  began  to  scramble  out. 

Q.  Was  it  intended  by  this  provision  in  any  way  to 
limit  tlie  quantity  of  film  in  circulation?  A.  No. 

Q.  Or  to  create  an  artificial  market,  or  demand  for  more 
film?  A.  No.  The  reason  was  to  improve  the  character  of 
the  exhibitions  by  removing  these  very  objectionable  films 
from  the  market. 

Q.  In  fact,  did  this  return  of  film  have  any  effect  what¬ 
ever  on  the  supply  of  new  film?  A.  I  do  not-  think  so.  I 
think  that  the  conditions  of  this  business  are  such  that  the 
film  is  passed  through  certain  regular  well-defined  channels, 
and  when  they  have  passed  through  those  channels,  and 
have  served  their  purpose,  their  usefulness  has  practically 
ended,  and  they  might  come  back  without  detriment  to  any-  • 
one;  in  other  words,  there  is  a  definite  track  over  which  the 
films  pass.  They  start  out  at  one  end  and  come  out  at 
the  other  end,  and  when  they  come  out  at  the  rear  end  of 
the  track,  they  have  practically  served  their  usefulness  and 
further  uses  would  only  be  to  injure  the  public  and  injure 
tlie  art. 

Q.  Now,  viewing  the  question  from  the  standpoint  of  the 
owner  of  the  patent  strictly,  and  not  his  interest  as  a  pro-  W 

ducer  of  motion  pictures,  was  this  restriction  as  to  the  re¬ 
turn  of  film  of  advantage  to  the  patent  owner?  A.  Yes.  It 
was  of  advantage  to  the  patent  owner  in  the  same  respect 
that  all  these  conditions  were  of  advantage  to  the  patent 
owner,  namely,  to  improve  the  tone  of  the  business,  improve 


Frank  L.  Dyer,  Direct  Examination.  1589 

the  character  of  the  business,  change  it  from  a  side  show 
ft  proposition  to  a  high-class  theatrical  proposition.  That  do- 

■  velopment  has  actually  taken  place.  The  very  development 

that  we  expected  and  predicted.  At  the  time  the  Edison 
licenses  were  made,  almost  the  only  theatres  in  existence 
were  the  small  store  shows.  It  was  generally  one  room  with 
some  battered  chairs  in  it,  and  a  screen  at  one  end,  and  the 
projecting  machine  at  the  other.  The  exhibition  was  given 
in  absolute  darkness.  The  place  was  badly  ventilated,  ex¬ 
tremely  dangerous  in  case  of  fire,  and  being  in  absolute 
darkness,  terrible  complaints  of  all  kinds  of  immoral  prac¬ 
tices  were  made;  in  fnct,  tlie  ordinary  motion  picture  place 
was  looked  upon  almost  as  a  house  of  assignation.  By  im¬ 
proving  the  character  of  the  films,  we  have  been  able  to  culti¬ 
vate  the  interest  of  cultured  and  refined  people  in  them,  so 
that  tlie  tone  of  the  entire  audience  has  improved,  and  as  a 
result  of  that  improvement,  the  reaction  lias  necessarily 
benefited  the  owners  of  the  patents. 

Q.  Was  it  believed  that  it  tended  to  increase  the  revenues 
which  he  would  ultimately  derive  from  his  royalties  under 
the  patents?  A.  Certainly.  That  is  what  I  intended  to  Bay 
in  few  words. 

Q.  Could  you  say  what  percentage  of  any  of  the  film 
returned  to  the  manufacturer  after  tlie  expiration  of  tlie 
six  months  was  fit  for  further  use  for  exhibition  purposes? 
A.  No,  I  could  not.  With  a  proposition  involving  thou¬ 
sands  of  films,  it  is  impossible  to  lay  down  any  fixed  definite 
rule  concerning  each  one.  You  will  have  to  deal  with  general 
rules,  and  the  general  rule  is  that  a  film  that  is  six  or  seven 
months  old  is  pretty  well  worn  out.  Creditable  exhibitions 
cannot  be  given  with  it.  Of  course,  in  actual  practice,  films 
are  sometimes  returned  that  are  not  worn  out.  They  are 
returned  because  tlie  public  will  not  permit  their  exhibition. 
Becently  with  our  company,  we  had  a  film  that  was  put  out 
that  was  of  an  advertising  nature,  and  tlie  theatres  refused 
to  run  it  because  they  refused  to  advertise  the  goods  of  any- ' 
,  one.  Then  sometimes  a  film  will  be  worn  out  very  quickly  • 

•ft)  because  it  is  very  popular,  and  will  be  subjected  to  the 

greatest  amount  of  usage  in  the  first  two  or  three  months.  , 
That  kind  of  a  film  would  be  returned.  And  sometimes  we 
are  unfortunate  enough  to  have  a  film  ruined  the  first  week 
or  the  first  day  or  the  first  time  it  is  run  through  the  ma¬ 
chine,  due  to  the  imperfect  operation  of  the  projecting  ma-; 


1590  Frank  L.  Dyer,  Direct  Examination. 


Frank  L.  Dyer,  Direct  Examination.  1591 


1  chine,  or  the  stupidity  of  some  operator,  and  such  a  film  ns 
that  is  returned,— so  that  it  is  impossible  to  have  nny  fixed 
rule  that  applies  to  all  films,  but  taking  the  question  from 
all  angles,  I  think  that  it  can  be  said  that  the  average  film 
that  has  been  run  under  average  conditions  six  to  seven 
months  is  worn  out  and  ought  to  be  returned. 

Q.  And  that  had  been  the  actual  experience  of  the  Edison 
Company  ns  a  producer  of  motion  pictures  nt  the  time  this 
agreement  was  made?  A.  Yes,  sir.  We  wanted  to  give  the 
films  their  full  measure  of  life,  but  get  them  back  before 

o  they  did  harm. 

2  Q.  Paragraph  7  provides  that  the  licensor  and  licensee 
shall  mark  conspicuously  on  the  labels  which  shall  be  placed 
on  the  boxes  or  packages  containing  motion  pictures,  certain 
terms  and  conditions  of  sale,  which  labels  were  to  be  headed 
ns  follows:  “Licensed  motion  pictures  patented  in  the 
United  States,  August  80th,  1897,  reissued  January  12th, 
1904.  The  enclosed  motion  picture  is  sold  upon  the  following 
terms  and  conditions.”  Then  follow  four,  conditions  under 
which  the  picture  is  sold,  the  first  of  which  is  that  the  pur¬ 
chaser  shall  not  re-sell  the  same,  but  shall  have  only  the 

„  right  to  use  it  in  giving  motion  picture  exhibitions  or  to  rent 
it  out.  Do- you  know  in  point  of  fact  whether  the  labels  on 
the  boxes  containing  motion  pictures  manufactured  and 
sold  by  the  licensees  and  the  licensor  and  required  to  he  so 
marked,  were,  in  point  of  fact,  so  marked,  in  accordance  with 
the  printed  conditions  required  by  this  paragraph?  A.  So 
far  as  I  know,  that  is  so.  It  was  certainly  so  in  the  case  of 
the  Edison  Company  and  I  believe  it  was  so  with  the  other 
licensees,  because  we  saw  that  they  received  these  labels, 
and  I  have  occasion  to  see  a  good  many  pictures  put  out  by 
tlie  other  licensees,  and  they  all  contain  this  label  on  the  box. 

4  .  Of  course,  I  was  quite  interested  in  this  particular  proposi¬ 
tion,  and  would  have  noticed  if  the  label  bad  not  been  on 
the  box. 

Q.  In  Paragraph  18  the  licensor  and  licensee  covenant 
that  they  will  not  dispose  of  the  motion  pictures  by  lonning 
them  or  renting  them  to  others,  nor  use  them  for  the  purpose 
of  giving  exhibitions  thereof  for  profit.  What  was  tlie  pur¬ 
pose  to  be  subserved  by  that  covenant?  A.  The  reason  for 
tlie  restriction  or  condition  against  loaning  or'  renting  films 
to  others  was  to  prevent  tlie  licensees  from  avoiding  the 
other  condition  of  the  license  relating  to  the  minimum  price, 


in  other. words,  the- licensee  might  interest  itself  in  one  or  1 
Q,  more  exchanges,  and  lend  or  rent  its  films  to  that  exchange 

:  at  a  low  price.  That  is  my  present  recollection  of  this  par¬ 

ticular  condition.  The  restriction  regarding  exhibitions  by 
the  licensees  had  to  do,  I  think,  with  preventing  licensees 
from  going  into  the  exhibition  business.  As  I  recall,  the 
exchanges  witli  which  we  dealt  at  that  time  were  fearful 
that  the  manufacturers  might  take  up  tlie  exhibition  busi¬ 
ness,  and  I  think  this  condition  was  designed  to  prevent  the 
manufacturers  from  interesting  themselves  in  the  theatres. 

•  Q.  And  did  that  covenant  have  some  relation  to  the 
amount  of  royalties  to  be  paid  ultimately  under  the  patents?  * 
A.  In  the  same  sense  that  all  the  conditions  had,  that  we 
wanted  to  impose  conditions  that  would  result  in  tlie  satis¬ 
factory  development  of  the  business,  and  as  the  result  of 
the  prosperity  which  we  thought  would  come  to  licensees 
under  proper  conditions,  the  Edison  Company  would  re¬ 
ceive  a  larger  amount  of  royalty. 

Q.  Most  of  the  provisions  to  which  I  have  particularly 
called  your  attention  in  the  Edison  license  agreements,  were 
subsequently  incorporated  in  tlie  license  agreements  made 
by  the  Motion  Picture  Patents  Company,  and  its  ten  so-  g  . 
called  manufacturers  and  importing  licensees,  which  are 
already  in  evidence  in  this  case,  is  that  right?  A.  Yes,  sir. 

Q.  Confining  your  answer  to  sucli  of  the  foregoing  provi¬ 
sions  as  were  substantially  incorporated  in  tlie  Motion  Pic¬ 
ture  Patents  Company  licenses,  you  may  state  whether  or 
not  tlie  purpose  or  purposes  of  including  them  in  tlie  latter 
licenses  were  tlie  snme  ns  was  the  case  in  tlie  licenses  is¬ 
sued  by  tlie  Edison  Manufacturing  Company,  having  in 
mind,  however,  the  fact  that  tlie  Motion  Picture  Patents 
Company,  the  licensor  under  this  license  agreement,  was 
not  itself  engaged  in  the  motion  picture  business,  that  is,  4 
producing  or  manufacturing.  A.  All  the  conditions  or  the 
reasons  for  tlie  conditions  were  the  same  in  the  case  of  the 
Patents  Company  as  with  tlie  former  Edison  licenses,  and 
■■  all  of  the  reasons  which  impelled  the  licensees  to  protect 

Qr  £)  themselves  from  unfair  treatment  on  the  part  of  the  Edi¬ 
son  Company  as  a  competitor,  were  doubly  present  in  the 
cuse  of  the  .  Patents  Company,  in  view  of  tlie  fact  that  the  > 
Patents  Company  was  owned  by  two  competitors,  namely,  • 
the  Edison  Company  and  the  Biograph  Company. 

Q.  You  were  President  of  the  Motion  Picture  Patents 


Frank  L.  Dyer,  Direct  Examination. 


Frank  L.  Dyer,  Direct  Examina 


1593 


Company,  were  you  not,  from  its  organization  up  to  about 
December,  1912?  A.  I  was  President  from  December  18th, 
1908,  until  X  resigned  in  December,  1912. 

Q.  Then  you  were  President  at  the  time  when  all  of 
these  license  agreements  were  executed  in  Deecmbr  of  1998? 
A.  I  was. 

Q.  What  was  the  reason  which  induced  the  Patents  Com¬ 
pany,  instead  of  authorizing  the  sale  of  these  motion  pic¬ 
tures,  to  restrict  it  to  a  lease?  A.  That  was  done  as  a  re¬ 
sult  of  our  experiences  under  the  Edison  licenses.  So  far 
as  the  exchanges  were  concerned,  it  made  no  difference, 
because  under  the  Edison  licenses,  there  was  a  conditional 
sale  with  the  return  of  the  film  at  the  end  of  six  months, 
while  under  the  Patents  Company  licenses,  there  was  a 
lease  for  the  return  of  the  film  at  the  end  of  seven  months; 
in  other  words,  the  Patents  Company  license  in  terms  of 
percentage  was  sixteen  and  two-thirds  per  cent,  more  favor¬ 
able  than  the  Edison  license.  The  main  purpose  of  pro¬ 
viding  tor  a  lease  instead  of  a  sale  was  to  more  effective¬ 
ly  prevent  infringement.  Under  the  Edison  licenses,  if  a 
licensed  film,  in  violation  of  the  conditions  of  the  license, 
was  shown  by  an  unlicensed  person,  it  was  difficult  to  en¬ 
force  the  agreement,  because,  in  the  first  place,  it  was  very 
difficult  to  identify  the  particular  copy  of  the  subject,  and 
trace  it  back  to  the  infringing  exchange.  There  was  no 
way  that  we  could  seize  it,  and  it  would  have  been  futile 
to  have  brought  a  patent  suit  against  the  theatre,  because 
the  film  was  used  by  the  theatre  only  from  one  to  two  or 
three  days.  I  recall  that  one  of  the  experiments  we  tried 
was  to  suggest  to  certain  of  the  manufacturers  to  put- 
private  marks  on  ench  copy  of  a  picture,  so  that  they 
would  be  able'  to  tell  when  the  picture  was  thrown  on  the 
screen  to  whom  it  was  sold,  and  thereby  trace  it  back  to 
the  infringing  exchange.  This  was  an  expensive  process, 
because  it  meant  putting  a  certain  individual  mark  on 
each  print,  and  a  considerable  amount  of  bookkeeping  in 
keeping  track  of  them,  and  I  do  not  recall  that  anything 
came  of  this  suggestion,  but  by  providing  for  the  lease  of 
the  films,  which  did  not  affect  in  one  iota  the  rights  of  the 
exchanges  or  their  free  use  of  the  film  in  exactly  the  same 
way  that  they  had  used  them  under  the  Edison  licenses,  we 
were  able  in  case  of  a  violation  of  the  license  to  seize  the 
films  by  replevin  suits,  or  rather,  the  individual  manufac¬ 


turers  were  able  to  do  that,  and  a  good  many  of  these 
replevin  suits  were  successfully  carried  out  in  the  case  or 
the  violation  of  the  licenses  by  infringing  theatres.  Also 
another  reason  that  impelled  us  to  change  to  the  lease  was 
that  in  <piitc  a  number  of  States  there  are  unfavorable  laws 
on  the  subject  of  conditional  sales,  and  we  felt  that  we 
might  involve  ourselves  in  difficult  problems  if  we  con¬ 
tinued  the  former  plan  of  selling  the  films  conditionally. 
This  change  did  not  in  any  way  prejudice  the  exchange,  and 
it  was  of  very  great  help  to  us  in  enforcing  our  legitimate 
patent  rights. 

Q.  By  unfavorable  laws  in  many  of  the  States,  do  you 
refer  to  the  laws  of  States  like  Pennsylvania,  for  instance, 
where  a  conditional  sale  of  a  chattel,  that  is  to  say,  a  sale 
with  a  reservation  of  title  in  the  vendor,  is  not  recognized? 
A.  Yes.  We  had  run  afoul  of  those  laws  in  handling  the 
Edison  business  phonograph  on  the  instalment  plan.  I 
thiuk  there  were  similar  laws  in  the  State  of  Ohio. 

Q.  Did  you  find  also,  that  it  was  difficult  to  enforce  the 
requirement  of  the  provision  in  your  license  as  to  the  re¬ 
turn  of  film  after  six  months,  where  title  had  passed?  A. 
Yes.  We  did  not,  as  I  said  before,  have  any  of  the  film 
returned  under  the  Edison  licenses,  but — 

Q.  (interrupting) :  You  were  confronted  with  that  dif¬ 
ficulty?  A.  We  were  confronted  with  that  difficulty,  and 
a  good  many  exchange  men  in  talking  with  me,  expressed 
the  opinion  that,  having  bought  the  films,  they  thought  they 
ought  to  be  allowed  to  keep  them,  and  not  be  required  to 
return  them.  And  I  think  if  we  had  gone  on  under  that 
arrangement,  we  would  undoubtedly  have  confronted  dif¬ 
ficulty  with  a  good  many  exchange  people  who  did  not  seem 
to  appreciate  what  a  conditional  Bale  was. 

Q.  Wlmt  was  the  purpose  of  incorporating  in  the  Mo¬ 
tion  Picture  Patents  Company  exchange  license  agreement, 
the  paragraph  reserving  to  the  Patents  Company  the  right 
to  cancel  the  license  on  fourteen  days’  notice?  A.  There 
were  a  good  many  reasons  for  this.  There  was  no  way,  or, 
at  least,  there  did  not  seem  to  be  any  way,  to  bind  the  ex¬ 
changes  irrevocably  to  the  Patents  Company,  and  compel 
them  to  always  remain  licensees,  and  deal  in  licensed  films. 
They  always  reserved  the  right  to  renounce  the  license  when¬ 
ever  they  saw  fit.  to  do  so. 


1B04  Frank  D.  Dyer,  Direct  Examination. 

My.  Grosvenor :  Whom  (lo  yon  mean  l>y  “they?” 
The  Witness:  The  exchanges. 

By  My.  Caldwell: 

^rsjsis^“£2»a“^ 

Q.  The  exchange  did  not  pay  any  consideYation  to  the 
Patents  Company  tor  these  licenses  did  s“y 

ii(.Qnse  -was  a  mere  privilege  and  not  a  light,  Like  any 
license,  it  was  the  privilege  to  be  immune  from  suit  dur¬ 
ing  the  existence  ot  the  license. 


By  Mr.  Caldwell  : 

O  You  may  narrate  the  events  that  led  up  to  the  forma-. 
tionQot  the  Patents  Company.  A.  When  the  Ellison  licenses 
were  in  effect,  the  business  resolved  itself  into  two  antagon¬ 
istic  factions,  the  Edison  licensees  on  the  one  hand,  and  the 
Biograph  Company  and  Mr.  Kleine,  I  think,  and  I  tin 
one  or  two  Biograph  licensees,  on  the  other.  Our  patent  on 
the  camera  had  been  sustained,  and  our  position  was  theie- 
55a  pretty  strong,  and  we  had  the  Aim  patent  which  covered 
all  motion  picture  films;  while,  on  the  other  hand,  the  13  o- 
graph  Company  had  patents  on  which  it  was  assertin  its 
rights ;  particularly  on  projecting  machines.  These  weie 


Frank  L.  Dyer,  Direct  Examination.  «0o 

the  Imtharn  patent  and  the  Pross  patent,  and  the  Armat-  1 
Jenkins  patent.  We  were  going  abend  with  the  accounting 
on  the  camera  patent,  and  were  also  pressing  the  suit  on 
the  film  patent  against  the  Biograph  Company,  and  .against 
various  infringers  in  the  Biograph  camp.  On  tom  pa . 
they  had  brought  a  suit  against  us  on  tlieir  patents.  \\  lien 
I  say  “us,”  I  mean  the  Edison  Company  and  its  licensees.  It 
looked  very  much  as  if  all  the  fighting  that  we :  had  been 
g  gel  ever  since  1898  or  earlier  was  to  stuit  all  ovei 
again.  When  the  Edison  licenses  were  being  granted,  I 
offered  the  Biograpli  Company  a  license,  but  they  refused  to 
takeit,  and  later  on  I  saw  Mr.  Marvin  with  Mr.  Kennedy, 
at  the  suggestion,  I  think,  of  Mr.  Patlie,  or  poBSibly  Mi. 
Gnmnont  may  have  made  the  suggcstion,-and  we  discussed 
the  possibility  of  settling  our  suits— settling  our  patent  dif 
Acuities.  Because  we  both  realized  that  if  the  suits  that 
were  pending  should  turn  out  successfully  to  the  patentees, 
we  would  simply  embargo  each  other.  We  wou i  d  prevent 
the  operation  of  any  successful  camera  under  the  canieia 
patent,  and  we  would  prevent  the  sale  or  the  use  or  any 
importation  of  film  under  the  film  patent,  and  they  would, 
prevent  the  use  or  exhibition  of  any  film,  however  made, 
under  the  patents  of  the  Biograph  or  Armat  companies.  Mi. 
Marvin  explained  the  case  from  his  point oi !  t  io ^  and 
pointed  out  the  importance  of  his  patents,  how  valuable  they 
were,  and  thought  it  might  be  possible  to  have  some  scheme 
under  which  we  would  recognize  his  patents,  and  lie  would 
recognize  our  patents,  with  a  division  of  the  royal hes  I 

asked  him  how  much  royalty  he  thought  the  1  mgraph  inter¬ 
ests  should  get,  and  lie  said  he  thought,  they  should  get  half, 
"allnotthinkhe  should  get  half,  because  Mr.  Edison’s  pat- 


the  licenses  granted,  and  he  was  getni 
fifty  or  three  hundred  thousand  dollars 
I  thought  his  position  was  rather  fine 
stronger  than  the  Biograpli.  Mr.  Mar 


Judge  Hazel,  and  could 
injunction,  and  the  Lathi 
and  was  valuable  for  tlia 
were  entitled  to  half  of  tl 


e  made  the  basis  of  preliminary 
n  patent  had  a  long  time  to  run, 
reason,  and  he  thought  that  they 
j  royalties,  and  I  would  not  agree 


1590  Frank  L.  Dyer,  Direct  Examtxa 


and  the  fight' went  on  again.  Or, 'rather,  the  fight  still  con¬ 
tinued,  because  tliis  brief  talk- did  not  stop  it  at  all.  Then  a 
little  later,  at  the  request  of  Mr.  Kleine,  I  went  up  to  see 
him  at  the  Republican  Club.  I  had  always  known  him  and 
liked  him,  and  he  told  me  that  the  constant  fighting  between 
the  Biograph  and  Edison  companies,  with  the  terrific  uncer¬ 
tainty  of  the  result,  had  put  everybody  up  in  the  air,  and 
they  did  not  know  where  they  were,  and  ho  suggested  that  if 
we  possibly  could,  we  ought  to  get  together  and  hnve  some 
agreement  that  would  result  in  a  termination  of  all  the  war¬ 
fare,  and  putting  the  business  in  a  condition  of  quietude,  so 
that  people  could  go' ahead  and  invest  money'  in  their  plants, 
and  build  better  theatres  and  develop  the  business.  Well,  I 
saw  Mr.  Marvin  and  Mr.  Kennedy  again,  I  think  in  company 
with  Mr.  Kleine,  and  we  went  through  the  same  performance 
that  we  did  at  our  first  meeting,  Mr.  Marvin  making  his 
speech,  and  I  making  my  speech,  and  he  making  his  demand 
for  half  of  the  royalties,  and  I  refusing  the  demand,  until  it 
occurred  to  me  that  if  Mr.  Edison  could  be  assured  that  he 
would  get  his  film  royalties,  why,  it  would  be  possible  then 
to  allow  tlie  Biograpli  Company  to  take  an  equivalent 
amount  out  of  the  royalties  that  might  be  collected  from 
other  sources,  and  that  anything  remaining  over  should  then 
be  divided  between  the  two  interests,  because  primarily  my 
purpose  was  to  try  to  save  the  money  that  Mr.  Edison  was 
getting  under  liis  patents.  I  did  not  want  to  jeopardize  that 
or  divide  it  up  with  anybody.  This  suggestion  met  with  the 
approval  of  Mr.  Marvin  and  Mr.  Kennedy,  and  then  I  saw 
that  it  was  possible  to  have  an  arrangement  that  would 
bring  the  two  concerns  together.  We  had  a  talk  at  that 
time,  and  I  think  we  had  several  other  talks  about  how  the 
thing  should  be  done,  and  naturally  the  first  suggestion  was 
for  them  to  recognize  our  patents  by  taking  a  license  under 
our  patents,  and  we  to  recognize  their  patents  by  taking  a 
license  under  the  Biograph  patents,  but  this  seemed  to  be  a 
very  difficult  thing  to  do,  and  it  would  have  to  be  done  any¬ 
way  by  means  of  a  combination  or  arrangement,  so  as  to 
divide  the  royalties  that  were  to  be  collected,  and  it  seemed 
to  us  that  the  only  proper  way  to  do  was  to  bring  all  the 
patents  into  one  holding  corporation  to  act  as  a  licensor, 
and  that  would  provide  the  various  ways  of  collecting  the 
royalties,  and  that  would  collect  the  royalties,  and  that 


Frank  U  Dyer,  Direct  Examination.  1597 

would  divide  the  royalties  between  the  several  patuut  own¬ 
ers,  on  the  basis  that  we  had  ngreedupon,  and  that  company 
was  later  formed  and  was  called  the  Motion  Picture  Patents 
Company. 

Mr.  Caldwell:  It  is  uow  half-past  four,  our 
usual  time  of  adjournment,  mid  I  suggest  that  wo 
adjourn  until  tomorrow,  at  the  usual  hour. 

The  Examiner:  The  hearing  is  adjourned  until 
10:30  o’clock  tomorrow  morning. 

Whereupon,  at  4:30  P.  M.  on  this  10th  day  of  November, 
1913,  the  hearings  are  adjourned  until  Tuesday,  the  11th  day 
of  November,  1913,  at  10 :30  A.  M.,  at  the  Hotel  Manhattan, 
New  York  City. 


Evidence. 


1000  Frank  L.  Dyer,  Direct  Examination. 

1  Thereupon  FRANK  L.  DYER  resumed  the  stand. 
Direct  examination  continued  by  Mr.  Caldwell: 

Q.  Mr.  Dyer,  in  answer  to  my  last  question  yesterday, 
in  speaking  of  your  conference  witli  Mr.  Marvin,  you  stated 
that  Mr.  Edison  was  getting  from  two  hundred  and  fifty 
to  three  hundred  thousand  dollars  a  year  out  of  licenses. 
Did  you  mean  by  that  he  was  getting  that  sum  from  his 
royalties  alone  under  his  patents,  or  altogether,  including 
his  profits  from  his  producing  plant?  A.  That  is  what 
.2  I  figured  the  royalties  would  amount  to. 

Q.  After  the  formation  of  the  Patents  Company,  to 
what  persons  were  licenses  issued,  first,  licenses  to  produce 
and  to  import?  A.  Licenses  were  granted  to  the  seven 
Edison  licensees,  and  also  to  the  Edison  Company,  Bio¬ 
graph  Company,  and  to  George  Kleine. 

Q.  Did  these  persons  constitute  substantially  all  of  the 
persons  engaged  in  the  production  and  importation  of  mo¬ 
tion  pictures  at  that  time?  •  A.  I  should  say  a  very  con¬ 
siderable  portion. 

Q.  Those  who  were  not  licensed,  were  they  of  any 
8  importance  in  the  art?  A.  No,  sir. 

Q.  So  substantially  the  entire  art  was  licensed?  A. 
Substantially  so. 

Q.  And  to  what  other  classes  of  persons  were  licenses 
issued?  A.  Licenses  were  also  issued  to  the  manufacturers 
of  projecting  machines,  and  also  to  exchange  men  who  were 
doing  a  distributing  business,  and  finally  to  theatres 
who  might  wish  to  show  licensed  film. 

Q.  I  think  it  is  in  evidence  that  abont  ninety-five  per 
cent,  of  the  manufacturers  of  projecting  machines  were 
licensed.  Does  that  accord  with  your  recollection?  A.  I 
4  think  fully  that.  I  know  that  all  of  the  important  manu¬ 
facturers  were  licensed.  And  X  might  add  that  licenses 
were  gran  ted.  to  other  concerns  who  started  up  in  business 
for  the  manufacturing  of  projecting  machines  after  the 
Patents  Company  was  formed. 

Q.  What  was  the  policy  of  the  Patents  Company,  in  the 
issuance  of  licenses  to  exchanges?  A.  To  grant  a  license 
to  any  fairly  representative  exchange  which  might  wish  to 
he  licensed.  I  do  not  recall  that  any  license  was  refused 


Frank  L.  Dyer,  Direct  Examination.  1(101 

to  an  exchange  at  the  time  that  the  Patents  Company  1 
was  started. 

Q.  Can  you  state  why  the  license  agreement,  or  the 
license  to  George  Kleine,  restricted  his  importations  to 
the  makes  of  certain  European  producers?  A.  At  that 
time,  as  I  stated  yesterday,  the  Patho  Company  towered 
head  and  shoulders  above  the  other  producers,  und  es¬ 
pecially  in  Europe,  and  next  to  them,  although  considerably 
smaller,  was  the  Gaumont  Company,  and  below  the  Gnu- 
inont  Company  was  a  large  number  of  small  producers. 

Mr.  Kleine  had  agency  contracts  for  a  great  number  of 
brands  of  films,  most  of  which  we  never  heard  of.  We  ” 
felt  that  it  would  be  a  mistake  to  allow  these  unimportant 
foreign  made  films  to  enter  into  the  programmes  of  the 
American  manufacturers,  because  we  were  fearful  that  it 
would  not  add  prestige  to  it.  The  Gaumont  films,  and  the 
Urban  Eclipse  films  were  good  representative  foreign  films, 
and  the  best  of  the  films  Mr.  XCleine  was  importing,  and 
we  felt  that  these  films  could  properly  bo  introduced  into 
the  programmes.  Mi-.  Kleine  wns,  therefore,  allowed  the 
importation  of  three  subjects  per  week,  of  these  two  films, 
but,  of  course,  he  was  not  restricted  as  to  the  number  of  g 

copies  that  he  could  import,  and  dispose  of.  This  gave 
the  iiccnsed  output  of  foreign  films— as  Patlie,  Gaumont, 
Urban  Eclipse,  and  Melics.  My  recollection  is  that  most 
all,  or  at  least  many  of  the  films  that  were  formerly 
handled  by  Mr.  Kleine  were,  when  he  terminated  his  agency 
for  them,  imported  into  this  country  by  other  concerns. 

So  that  their  importation  into  this  country  was  not  stopped, 
although  they  were  not  licensed. 

Q.  So  far  as  you  know,  did  Mr.  Kleine  protest  against 
being  restricted  to  importation  of  these  two  brands  of 
films?  A.  No.  Those  two  brands  were  practically  his  .4 
entire  business. 

Q.  Were  many  of  the  other  films  imported  by  Mr. 
IClcine  of  a  character  to  reflect  credit  upon  the  art?  A. 

No,  they  were  poorly  and  cheaply  made,  and  many  of  them, 
as  I  recall,  were  not  the  kind  that  would  appeal  to  the 
■  American  people.  AS  a  matter  of  fact,  foreign  films,  I  do 
not  think,  at  any  time  appealed  very  strongly  to  Americans, 
because  the  foreign  idea  ,of  morals  is  different  from  the 
Americun  idea;  but  a  large  mass  of  foreign  films  wns  used 
in  the  early  days,  because  those  were  all  that  the  Ameri- 


1002  Frank  L,  Dver,  Direct  Examination. 


Frank  l.  Dvbr,  Direct  Examination. 


1003 


1  can  lmd,  except  the  limited  number  of  American  films 

that  were  being  gradually  developed.  r  } 

Q.  In  refusing,  then,  to  license  these  cheap  films,  many 
of  which  were  not  up  to  the  American  standard  of  morals, 
was  the  Patents  Company  actuated  by  any  purpose  or 
desire  to  improve  the  condition  of  the  art,  and  thereby  in¬ 
crease  the  revenues  which  they  might  ultimately  receive 
under  their  patents?  A.  Yes,  sir. 

Q.  Mr.  Dyer,  will  you  state  just  what  the  motion  picture 
business  is,  as  it  is  conducted  in  this  country  today?  A. 

The  motion  picture  business  at  the  present  time  is  prac- 

2  tically  a  theatrical  business,  because  it  deals,  for  the  most 
part,  with  dramatic  works.  It  makes  the  same  appeal  to 
the  imagination  that  is  made  by  the  drama.  It  is  a  new 
form  of  intellectual  appeal.  It  depends  for  its  successful 
accomplishment,  first,  upon  an  optical  defect  of  the  eye, 
known  ns  the  persistence  of  vision,  and  it  depends,  in  the 
second  place,  upon  the  Iranian  faculty  of  forming  mental 
images  when  the  imagination  is  aroused,  as  with  litera¬ 
ture,  paintings,  music,  or  the  drama.  A  moving  picture 
audience  is  like  any  other  audience,  sitting  spellbound  and 
unconscious  of  its  surroundings.  Like  the  regular  stage, 

3  the  spectator  of  a  moving  picture,  experiences  the  feelings 
and  sensations  of  -the  characters  which  appear  on  the 
screen.  These  photographic  images  are  just  ns  real  to 
the  moving  picture  spectator  as  are  the  living,  breathing, 
actors  and  actresses  of  the  regular  stage.  The  popular 
motion  picture  actresses  are  just  ns  ranch  overwhelmed 
by  letters  from  admirers  as  the  most  popular  nctresscs  of 
tiie  regular  stage,  although  they  are  known  to  the  people 
only  by  reason  of  their  photographic  representations. 

.  Mr.  Ghosvbnok:  That  is  highly  interesting,  but 

1  I  fail  to  see  how  it  is  relevant  or  material,  and,  there¬ 

fore,  we  make  objection  to  it. 

Mr.  Caldwell  :  I  think  it  very  material  to  show 
to  the  Court  the  real  nature  of  the  business  coil-  . 

ducted  by  these  defendants,  which  they  are  charged  (_r 

with  restraining  and  monopolising. 

The  Examiner :  Proceed,  Mr.  Witness. 

A.  (continuing)  :  The  motion  picture  business,  like 
the  theatrical  business;  falls  naturally  into  three  groups — 


first,  the  producer;  second,  the  distributor,  and  third,  the  1 
*  exhibitor.  In  the  production  of  a  motion  picture  drama, 

»  the  play  is  selected  and  prepared,  in  precisely  the  same  way 

as  if  for  the  regular  stage,  except,  of  course,  with  the 
regular  drama,  the  playwright  provides  the  spoken  words; 
but  in  the  case  of  pantomime  there  is  really  no  difference  in 
the  original  play,  except  that  the  motion  picture,  because 
of  its  greater  flexibility,  and  greater  possibilities,  permits 
of  many  more  scenes,  and  the  securing  of  effects  that 
would  not  even  lie  suggested  in  the  case  of  n  pantomime. 
Having  prepared  the  play,  it  is  turned  over  to  a  director,  0 
exactly  as  is  the  case  with  the  regular  drama,  and  that  " 
director  gathers  around  him  in  one  case,  as  in  the  other, 
the  body  of  actors  selected  to  perform  the  respective  parts. 

In  each  case  costumes  are  provided,  proper  scenery  is 
painted,  and  the  necessary  properties  secured.  The  di¬ 
rector  rehearses  the  actors  so  that  they  may  become  .per¬ 
fect  in  their  parts,  exactly  as  the  director  of  a  regular 
stage  conducts  his  rehearsals;  and  when  perfection  is 
reached,  the  motion  picture  camera  is  brought  out,  and 
the  finished  performance  given  before  the  camera,  and  a 
photographic  negative  record  taken  of  that  performance.  g 
In  other  words,  so  far  as  the  production  is  concerned, 
the  motion  picture  art  is  the  same  as  the  regular  dramatic 
art,  except  that  instead  of  utilising  the  body  of  actors 
collected  by  the  director  to  go  out  on  the  road  and  give 
their  performances  before  the  various  audiences,  the  di¬ 
rector  in  the  case  of  the  motion  picture  play  sees  that 
a  photographic  record  of  the  drama  is  made,  and  copies  of 
this  record  are  sent  out  on  the  road,  and  are  exhibited  in 
the  several  theatres.  The  second  class,  or  group,  connected 
with  the  motion  picture  business,  namely,  the  distributor, 
has  its  analogy  in  the  regular  theatrical  business  in  the  4 
booking  office,  or  in  the  booking  agency,  and  in  the  mo¬ 
tion  picture  business  this  distributor  is  called  nn  ex- 
.  change.  The  purpose  of  the  exchange  is  to  distribute  the 

plays  among  the  motion  picture  theatres.  Decause  of  the 
4$  brevity  of  the  motion  picture,  a  programme  usually  com¬ 

prises  three  or  more  plays,  and  these  programmes  are 
chnnged  from  one  to  seven  times  weekly.  With  the  more 
important  pictures,  which  are  a  recent  development,  and 
which  seem  to  be  destined  to  greater  use  in  the  future,  pic¬ 
tures  of  the  same  general  type  as  Quo  Yadis — the  hooking 


is  precisely  the  same  as  the  boohing  of  a  regular  dramatic 
.  performance,  dates  being  arranged  in  advance,  and  ad¬ 
vertised  by  the  theatres  exactly  as  they  might  advertise  a 
regular  road  show.  The  only  difference  between  a  dis¬ 
tributor,  or  exchange,  in  the  motion  picture  business,  and 
the  booking  office,  or  the  booking  agency,  in  the  theatrical 
business,  is  that  in  one  cose  the  distributor  deals  with  the 
photographic  record  of  the  play,  while  the  booking  agency 
in  the  tlientrical  business,  deals  with  living,  breathing 
actors,  and  the  tangible  accessories  of  the  performance, 
such  as  scenery,  costumes  and  properties,  including  in  the 
latter  sometimes,  various  animals.  The  difference  between 
the  moving  picture  business  in  this  respect,  and  the  theat¬ 
rical  business,  is  that '  the  transportation  of  a  tlientrical 
company  may  require  one  or  two  cal's,  while  the  moving 
picture  requires  a  package  smaller  than  a  dress  suit  cnse. 
So  far  as  the  third  group  is  concerned,  namely,  the  theatres, 
one  is  practically  the  same  as  the  other.  In  fact,  it  is 
very  common  for  motion  pictures  to  be  shown  in  regular  . 
theatres,  and  it  is  getting  to  be  more  and  more  common 
for  small  plays,  and  vaudeville  acts,  to  be  shown  in  con¬ 
nection  with  motion  pictures  in  picture  houses.  In  fact,  in 
one  State  that  I  know  of,  Massachusetts,  the  law  pro¬ 
hibits  continuous  exhibitions  of  pictures  for  more  than 
twenty  minutes  at  a  time,  so  that  it  is  necessary  to  fill  in 
with  vaudeville,  or  small  plays. 

The  only  difference  between  a  motion  picture  theatre 
and  a  regular  theatre  is  that  while  a  regular  theatre  has 
a  horizontal  stage,  upon  which  the  actors  perform,  a  mo¬ 
tion  picture  theatre  makes  use  of  a  vertical  screen,  upon 
which  the  photograhic  representations  of  the  actors  are 
projected;  and  also,  a  motion  picture  theatre  is  generally 
smaller  than  a  regular  theatre,  and  more  economically 
run,  and  the  price  of  admissions  is  almost  invariably 


Frank  L.  Dyer,  Direct  Examination.  1005 

mission  to  motion  picture  theatres  is  less  than  to 
other  theatres. 

Mr.  Caldwell:  But  those  are  not  necessarily 
matters  of  which  the  Court  would  take  judicial  no¬ 
tice — we  have  got  to  prove  them. 

The  Witness:  Mr.  Grosvenor  might  stipulate.' 


The  Witness:  I  don’t  think  I  t 


Q.  Then,  in  point  of  fact,  the  only  thing  which  differen¬ 
tiates  the  picture  play  from  the  regular  theatrical  play  is 
that  the  latter  is  presented  by  living  actors,  and  by  word 
of  mouth,  and  the  former  by  photographic  images  of  these 
same  actors?  A.  That  is  correct,  and  apparently  the  effect 
on  the  audience  is  the  same  in  the  one  case  as  in  the 
other.  In  the  case  of  the  motion  picture  it  seems  to  be 
a  very  remarkable  fact  that  the  imagination  of  the  audience 
revivifies  the  photographic  images,  and  turns  them  into 
life.  Not  only  this,  but  the  imagination  also  supplies  the 
perspective  to  the  fleeting  images,  and  also  supplies  color 
to  the  black  and  white  photographs.  The  incongruity  of 
a  black  and  white  rose  never  seems  to  uppeul  to  a  mov¬ 
ing  picture  audience. 

Q.  The  various  mechanical  devices  involved  in  the  pro¬ 
duction  of  the  motion  picture  play  are  not  apparent  at  all 
to  the  audience,  are  they?  A.  You  mean  the  cameras 

Q.  Yes,  the  cameras,  projecting  machines,  and  any 
other  mechanical  devices  used  in  the  production  of  the 
play?  A.  No,  sir.  The  only  thing  that  the  audience  sees 
is  the  photographic  images  on  the  screen,  apparently  in 
movement. 

Q.  The  film  itself  is  not  seen?  A.  No,  sir. 

Q.  Will  you  state  what  classes  of  persons  are  engaged 
in  the  production  of  the  motion  picture  play?  A.  The  di¬ 
rector  who —  ■ 

Q.'  (interrupting) :  Isn’t  there  a  class  of  persons  who 


1000  Frank  L.  Dyer,  Direct  Examination. 

have  something  to  do  with  the  business  or  contribute  to  . 

the  business,  that  precedes  even  the  director?  A.  Yes.  Q  • 

First  I  should  take  the  scenario  writer,  who  prepares  the 
necessary  play  or  drama ;  then  the  director,  who  attends 
to  the  rehearsing  of  the  actors;  then  the  actors  who  ap¬ 
pear  in  the  play;  scene  painters  who  prepare  the  scenario; 
carpenters  who  make  the  necessary  properties;  people  who 
have  charge  of  the  costumes  and  wigs;  and  finally,  the 
camera  man,  who  actually  operates  the  camera  to  take 
the  picture;  with  the  usual  accessories  of  electricians  and 
mechanics  generally  found  around  a  studio  or  in  a  regular 
theatre. 

Q.  What  class  of  persons  in  the  motion  picture  business 
are  employed  in  your  second  class  that  you  have  described, 
which  you  have  stated  is  analogous  to  the  booking  office  or 
booking  agency?  A.  These  are  the  exchanges.  Offices  that 
are  located  at  centers  of  distribution,  in  charge  of  a 
manager  who  is  familiar  with  the  business,  with  a  stock 
of  films  that  is  constantly  mobile,  inspectors  and  repairers, 
who  are  attending  to  the  inspection  and  cleaning  and  re¬ 
pairing  of  the  film,  booking  men,  who  attend  to  the  booking 
of  the  programs  to  the  several  customers,  and  the  usual 
office  employees,  who  attend  to  the  general  work. 

Q.  While  it  is  usual  for  the  producer  of  motion  pic¬ 
tures  to  have  a  so-called  manufacturing  plant  ns  pnrt  of 
his  equipment,  is  that  always  a  necessity?  A.  No,  the 
manufacturing  operations  are  quite  independent  of  and  dis¬ 
tinct  from  the  purely  artistic  work  of  producing  the  plays. 

Just  as  the  mechanical  work  of  a  regular  theatrical  per¬ 
formance  is  independent  of  the  artistic  part.  It  is  quite 
the  common  thing  in  this  country  for  studios  where  the 
artistic  work  is  done,  to  he  located  sometimes  as  far  ns 
three  thousand  miles  away  from  the  manufacturing  plant 
where  the  purely  manufacturing  operations  are  performed: 

And  in  Europe,  it  is  quite  common  for  companies  to  go  no 
further  than  to  attend  to  the  artistic  work  of  producing  the 
negative,  leaving  the  manufacturing  operations  to  some  man¬ 
ufacturer.  The  Patlie  Company,  in  Paris,  for  instance,  do 
the  printing  for  quite  a  considerable  number  of  the  pro¬ 
ducers,  and  I  believe  this  will  be  the  eventual  develop-, 
ment,  or  one  of  the  developments,  possibly,  in  this  country. 

I  think  even  now  there  are  some  concerns  in  America  who 


Frank  L.  Dyer,  Direct  Examination.  100T 

have  no  manufacturing  plants,  but  who  merely  make  the 
negatives. 

Q.  Take  the  case  of  the  Edison  Company.  Will  you 
state  where  its  studio  is  located,  and  where  its .  so-called 
factory  is  located?  A.  The  main  studio  of  the  Edison 
Company  is  at  Bedford  Park,  Bronx,  New  York,  and  the 
factory  where  the  printing  operations  are  performed,  is  at 
Orange,  New  Jersey,  about  twenty  miles  away.  The  Edison 
Company  also  maintain  a  studio,  or  did,  while  was  con¬ 
nected  with  them,  at  Los  Angeles,  California. 

Q.  Can  yon  state  the  locations  of  the  Btudio  and  the  man¬ 
ufacturing  plant  in  the  case  of  any  of  the  other  producers? 
A.  Yes.  In  the  case  of  the  Biograph  Company,  the  factory 
and  main  studios  are  located  in  Now  York  City,  but  they  alBo 
maintain  a  studio  at  Los  Angeles.  In  the  case  of  the  Lubin 
Company,  the  factory  and  one  studio  are  located  in  Phila- 
•  dclpliiu,  but  they  maintain  very  large  studios  at  Betawood, 
about  thirty  miles  outside  of  Philadelphia,  and  studios  also 
in  Jacksonville  and  Los  Angeles.  The  Selig  plant  iB  in  Chi¬ 
cago,  where  its  main  studio  is  also  located,  but  the  Selig 
Company  maintains  a  large  studio  at  Los  Angeles.  And 
the  same  is  true  of  the  Essanay  Company,  which  has  recently 
started  the  production  of  negatives,  I  think,  at  Watkins 
Glen,  New  York.  The  Patlie  Company  have  their  manufac¬ 
turing  plant  at  Bound  Brook,  and  their  American  studio  at 
Hoboken,  while  their  main  studios  are  in  Paris. 

Q.  Can  you  state  why  so  many  of  the  studios  are  located 
in  Los  Angeles,  California?  A.  On  account  of  the  generally 
fine  weather  there,  and  the  great  variety  of  natural  scenery, 
just  the  same  as  many  of  the  studios  of  French  producers 
are  located  on  the  Mediterranean. 

Q.  What  has  the  fine  weather  to  do  with  the  work  of  a 
studio?  A.  Because  a  great  deal  of  work  has  to  he  done  out¬ 
side  of  a  studio,  for  getting  outside  scenes,  and  it  is  impor¬ 
tant  that  there  should  he  as  little  waste  of  time  os  possible, 
.  because  waste  is  very  expensive  in  the  production  of  pic- 
tuves,  and  it  is  important  to  keep  the  actors  employed  as 
O'  *  actively  as  possible.  Good  sunlight  is  also  important  to  se¬ 

cure  proper  photographic  quality. 

Q.  Then  would  you  say  that  the  term  “manufacturer,”  as 
applied  to  the  producer  of  motion  pictures,  was  a  misnomer 
j  in  a  sense?  Does  it  correctly  describe  the  occupation?  A. 


1G08  Frank  L.  Dyer,  Direct  Examination. 


Frank  L.  Dvnn,  Direct  Examination. 


11500 


No,  I  do  not  think  it  does.  I  think  the  same  relation  exists 
between  the  producer  and  a  manufacturer,  if  we  attempt  to  Q 

separate  them,  that  exists  between  the  producers  of  the  Cen¬ 
tury  Magazine,  who  do  the  literary  work  and  get  up  the 
magazine,  and  the  Do  Vinne  Press,  that  prints  the  copies  of 
the  magazine. 

Q.  What  percentage  of  motion  pictures  exhibited  in  this 
country  would  you  say  are  of  a  purely  theatrical  character, 
that  is  to  say,  either  drama,  comedy  or  farce  ?  A.  The  num¬ 
ber  varies  from  week  to  week,  but  I  think  the  average  would 
be  from  85  to  95  per  cent. 

Q.  And  the  rest  of  the  pictures  are  made  up  of  so-called 
scientific,  educational,  scenic  and  topical  subjects,  is  that 
correct?  A.  Yes,  sir. 

Q.  What  is  meant  by  a  scientific  picture?  A.  A  scientific 
picture  is  one  that  illustrates  some  scientific  phenomenon, 
such  as  the  flight  of  a  bullet,  or  views  of  the  moon,  or  a 
chemical  reaction,  all  of  which  have  been  shown  in  motion 
pictures. 

Q.  What  is  an  educational  picture?  A.  It  is  not  very 
easy  to— 

Q.  (interrupting) :  Can  you,  strictly  speaking,  differen¬ 
tiate  between  a  scientific  picture  and  an  educational  picture? 

A.  Yes.  I  think  an  educational  picture  would  be  correctly 
defined  as  one  that  possessed  educational  value  without  the 
scientific  attributes.  For  instance,  a  picture  illustrating  the 
raising  of  sheep,  or  the  iron  industry,  or  the  tobacco  indus¬ 
try,  or  the  sugar  industry,  all  of  which  have  been  shown  in 
motion  pictures.  It  is  getting  to  be  quite  a  common  thing  to 
disguise  educational  pictures  by  a  dramatic  story,  so  as  to 
make  them  more  attractive.  For  instance,  the  Edison  Com¬ 
pany  made  a  very  well-known  picture  called  “The  Man  Who 
Learned;”  which  was  designed  to  point  out  the  dangers  of 
unsanitary  conditions  in  connection  with  the  supply  of  milk, 
hut  the  moral  was  taught  in  a  story  of  great  dramatic  inter¬ 
est.  And  we  also  made  another  picture  called  “The  Wedding 
Bell,”  that  was  a  strong  dramatic  story,  but  was  essentially 
an  educational  picture,  because  its  object  was  to  point  out  the  ©< 

evils  of  sweatshop  labor.  . 

Q.  What  is  a  scenic  picture?  A.  A  scenic  picture  is  one 
that  contains  simply  scenery,  or  possibly  views  taken  in  a 
city,  showing  important  buildings  or  streets.  For  instance, 
a  picture  of  the  Alps  would  he  a  scenic  picture,  and  one  show¬ 


ing  a  panorama  of  Broadway,  New  York,  would  also  be  a 
£)  scenic  picture. 

.  Q.  And  wimt  is  a  topical  picture?  A.  A  topical  picture 
is  one'  that  depicts  a  subject  of  topical  interest,  such  as  a 
championship  baseball  game,  or  prize  fight,  or  the  inaugura¬ 
tion  of  a  President,  or  a  subject  of  this  general  character. 

Q.  What,  do  the  so-called  dramatic  pictures,  as  the  term 
is  used  in  the  motion  picture  business,  include?  A.  I  do  not 
think  the  term  dramatic  picture  is  used,  hut  we  refer  to 
dramas,  by  which  we  mean  a  story  of  dramatic  interest,  de¬ 
void  of  comedy  or  farcical  features. 

Q-  Then  the  term  “drama,”  as  used  in  this  art,  would  in¬ 
clude  tragedy  and  melodrama?  A.  No.  We  sometimes  use 
the  term  “melodrama”  to  mean  a  drama  with  tragic  features, 
but  ordinarily  the  word  “drama”  includes  everything  of  a 
dramatic  nature,  except,  comedies. 

Q.  Then  are  the  terms  used  in  the  same  sense  that  they 
are  used  in  the  theatrical  profession?  A.  Yes.  In  exactly 
tile  same  sense. 

Q.  What  are  the  considerations  which  enter  into  the 
selection  of  a  play  to  be  produced  on  the  motion  picture 
stage?  A.  Strength  of  plot,  the  timeliness  of  the  subject, 
interest  of  the  story,  the  moral  sought  to  be  taught,  are  all 
factors  that  are  considered  in  the  selection  of  a  motion  pic¬ 
ture  play. 

Q.  They  are  precisely  the  same,  then,  as  in  the  regular 
theatrical  business?  A.  Yes,  sir,  exactly.  The  motion  pic¬ 
ture  business,  as  I  pointed  out,  is  practically  a  theatrical 
business. 

Q.  What  means,  if  any,  are  resorted  to  by  the  producer 
of  a  play  or  the  exhibitor,  in  ol  der  to  supply  the  omission 
of  the  spoken  word?  A.  The  fact  that  with  the.  motion 
picture  play,  there  is  no  dialogue  except,  of  course,  in  the 
case  of  the  talking  pictures  which  are  a  recent  develop¬ 
ment,  it  makes  it  impossible  with  a  motion  picture  play  to 
get  the  very  line  shadings  of  emotion  that  are  possible 
with  the.  spoken  word,  so  that  the  motion  picture  play  is 
V  perhaps  not  as  complex  as  the  regular  spoken  play,  hut 

there  are  several  ways  to  supply  the  deficiency  of  the 
spoken  word  witli  the  motion .  picture  play,  by  which  its 
effectiveness  is  very  much  increased.  For  instance,  the 
actors,  ns  is  well  known,  generally  in  rehearsing,  make  use 
of  words,  and  very  frequently  these  words  can  he  disting- 


]G10  Frank  D.  Dveii,  Direct  Examination. 

uiRhed  on  the  screen,  particularly  when  they  are  single 
“  m,ch  „s  mother”  or  -help.”  Then,  the  director  lms 
the  advantage,  which  is  not  possible  with  the  regular  spoken 
drama,  of  throwing  sub-titles  on  the  screen,  that  w  t<  saj, 
words  or  phrases  or  sentences  that  are  design^ .to  tx 
nlnin  the  siguilicance  of  the  scene  which  is  to  follow.  A 
sub-title  is  used  when  the  director  fears  that  the  proper 
effect  of  a  scene  will  not  he  appreciated.  Then  also 
the  motion  picture  play,  it-  is  Very  common  to  th  ow  ,m 
the  screen,,  letters  and  telegrams  and  document*  t  ^ 

audicnce  can  read,  for  the  purpose  of  making  tl.e  plot  clea  , 
n  l  id  on  the  regular  stage,  are  read  by  one  of  the 
characters  as  a  part  of  the  dialogue.  Then,  a  very  effective 
way  of  supplying  the  deficiency  of  the  spoken  word,  is  by 
so-called  double  exposure,  where,  on  the  main  picture  up-, 
pears  a  small  auxiliary  picture  designed  to  explain  the 
action  of  the  main  picture.  For  instance,  m  a  regnlai 
spoken  play,  if  one  of  the  character,  wished  «ie  ‘iiulience 
to  know  that  at  one  time  he  had  been  a  -cowboy  on  t 
western  plains  and  lmd  taken  part  in  a  certain  incident,  In. 
woum  tcU  his  story  as  part  of  the  dialogue.  In  the  motion 
picture  piny,  we  actually  throw  on  the  screen  as  an  a 
ary  to  the  main  picture,  scenes  showing  the  character  ns  a 
cowboy  on  the  western  plains,  and  enacting  the  same  inci¬ 
dent  that  he  would  describe  by  words  in  the  regular  play. 
These  various  expedients  have  been  developed  in  the  art, 
and  permit  motion  picture  plays  of  fairly  complex  charac¬ 
ter  which  are  perfectly  intelligible  to  the  audience. 

Q.  Then  the  double  exposure  is  a  device  winch  makes 
possible  dramatic  representations  on  the  motion  picture 
stage  which  is  impossible  on  the  legitimate  stage,  is  that 
correct?,  A.  The  double  exposure,  of  course,  on  the  regular 
stage  would  be  impossible,  lint  the  same  effect  is  secured 
on  the  regular  stage  by  menus  of  the  spoken  word. 

Q.  But  the  dramatic  action  is  wanting?  A.  The  dra¬ 
matic  action  is  wanting,  of  course.  _  „ 

Q.  You  have  mentioned  the  play  culled  Quo  \adis. 
Have  you  ever  seen  that  play?  A.  Yes,  sir. 

Mr.  Guosvhnou:  May  I  interrupt?  Who  brought 
out  Quo  Vadis? 


Frank  L.  Dyer,  Direct  Examination.  .  1G11 
The  Witness:  The  Cines  Company  at  Milan. 

Mr.  Gbosvbnor:  That  is  a  foreign  company,  isn’t 


Mr.  Grosvbnor:  I  object  to  any  examination 
about  Quo  Vadis. 

By  Mr.  Caldwell: 

Q.  Was  Quo  Vadis  a  picture  imported  by  one  of  the 
so-cailed  licensed  importers  of  the  Motion  Picture  Patents 
Company?  A.  Yes,  sir,  it  was  imported  by  Mr.  Kleme. 

Q..  And  that  picture  is  licensed  by  the  patents  owned 
l,y  the  Motion  Picture  Patents  Company,  is  it  not?  A. 
Yes,  sir. 

Mr.  Caldwell:  I  think  that  answers  your  ob¬ 
jection,  doesn’t  it,  Mr.  Grosvcnor? 


By  Mr.  Caldwell: 

Q.  There  is  a  scene  in  that  picture  that,  takes  place  in 
the  Roman  amphitheatre,  is  there  not?  A.  Yes,  sir. 

Q.  Could  you  describe  Hint  scene  briefly?  A.  Yes.  The 
scene  shows  the  representation  of  the  Roman  amphitheatre 
with  Nero  and  his  attendants  in  the  seats  or  honor,  and  a 
good  many  thousand  spectators  depicted  ns  the  audience, 
and  tlie  turning  of  the  lions  into  the  amphitheatre  to  de¬ 
vour  the  Christian  martyrs. 

Q.  Are  all  of  these  spectators  in  motion?  A.  They  are 
the  photographs  of  real  people. 

Q.  Ill  motion?  A.  In  motion. 

.  Q.  Would  such  a  scene  ns  that  he  possible  on  the  regu¬ 
lar  dramatic  stage?  A.  No,  sir.  ’  _  • 

Q.  Why  not?  A.  Because  of  the  limitations  of  the 
stage,  it  would  he  impossible  to  anywhere  near  approximate 
the  size  and  grandeur  of  the  settings.  On  the  regular  stage, 
the  audience  in  the  amphitheatre  would  be  confined  prolm- 


1G12  Frank  L.  Dyrk,  Dinner  Examination. 

bly  to  fifty  to  a  hundred  people.  In  the  motion  pictures,  I 

think  there  were  tit  least  three  thousand  m  the  audience,  Q 

and  possibly  five. 

Q.  On  the  regular  stage,  the  spectators  would  be  repre¬ 
sented,  would  they  not,  by  painted  linages  on  the  scenery? 

A.  They  might  he.  Or  they  might  be-  real  people  gathered 
on  the  stage. 

Q.  There  is  another  scone  in  that  piny  which  depicts 
the  burning  of  Rome, '  is  there  not?  A.  Yes.  There  are 
several  scenes  allowing  the  burning  of  Rome. 

Q.  Could  that  scene  be  possible  of  reproduction  on  the 
regular  dramatic  stage?  A.  Not  to  the  same  extent.  Not 
with  the  same  vividness  nor  could  it  cover  the  same  area'. 

The  regular  stage  is  necessarily  circumscribed  by.  reason  of 
its  limited  size. 

Q.  From  what  sources  do  the  producers  of  motion  pic¬ 
ture  plays  obtuin  their  plays?  A.  Generally,  the  plays  are 
prepared  by  a  new  type  of  literary  artist,  who  lias  devel¬ 
oped  with  the  art,  called  the  scenario  writer.  Sometimes 
these  scenario  writers  are  regular  dramatists.  For  instance, 
the  present  Congressman,  E.  W.  Townsend,  of  my  home 
town,  was  a  scenario  writer  for  the  Edison  Company,  anil 
was  also  a  dramatic  writer  and  novelist.  These  scenario 
writers  base  their  plays  on  original  plots,  and  somejtimep 
they  base  them  on  other  sources  of  literary  work,  such 
ns  standard  works  of  fietion.  The  Bible  is  a  very  potent 
source  of  inspiration  for  motion  picture  plays.  Most  of 
the  biblical  scenes  have  been  enacted  as  parts  of  motion 
picture  dramas.  Most  of  the  works  of  Dickens  and  Thack¬ 
eray  have  been  converted  into  motion  picture  plays.  Many 
of  the  plays  of  Shakespeare  have  been  used,  and  other 
standard  dramas.  Poetry  is  also  a  source  of  inspiration. 

The  Lady  of  the  Lake  lias  been  given.  Such  an  apparently 
impossible  subject  as  Pippa  Passes,  by  Browning,  was 
made  into  a  very  beautiful  motion  picture  play  by  the  Bio¬ 
graph  Company.  By  means  of  the  motion  picture,  any 
work  of  Action,  or  of  the  drama,  can  be  presented  graph- 
ically  nnd  vividly  to  the  audience  for  Hve  cents.  W 

Q.  Does  it  happen  with  more  or  less  frequency  that  the 
authors  of  plays,  playwrights,  who  write  for  the  regular 
dramatic  stage,  also  write  motion  picture  plays?'  A.  Many  . 

dramatic  authors  write  motion  picture  plays.  For  instance, 

I  have  mentioned  the  case  of  Congressman  Townsend.  And 


( 


Frank  L.  Dyeii,  Dinner  Examination.  1013 

I  know  that  Mr.  Augustus  Thomas  is  now'  working  on  mo-  1 
0  tion  picture  plays,  and  also  Charles  Klein. 

Q.  Does  it  often  happen  that  a  well-known  work  of 
Action  is  dramatized  for  the  motion  picture  stage,  just 
ns  it  is  on  the  regular  dramatic  stage?  A.  Oh,  yes.  That 
is  another  source  of  inspiration.  For  instance,  the  Famous 
Players  Company  are  just  putting  out  a  play  called,  “In 
the  Bishop’s  Carriage,”  which  Arst  appeared  as  a  novel. 

.And  also,  “Soldiers  of  Fortune,”  by  Richard  Harding 
Davis,  is  now  being  mnde  into  a  motion  picture  play,  and 
this  Arst  appeared  as  a  novel. 

Q.  Do  you  happen  to  know  whether  “Ben  Hur”  and-  ® 
“The  Last  Dnys  of  Pompeii,”  have  also  been  dramatized 
for  the  motion  picture  stage?  A.  Yes.  Both  of  these 
works  have  been  made  into  motion  picture  plays. 

Q.  Would  you  say  that  that  is  typical  of  whut  has  been 
done,  and  what  is  being  done  every  day  in  the  motion 
'  picture  art?  A.  Yes.  The  motion  picture  art  is  bringing 
these  Ane,  standard,  elevnting  works,  to  the  attention  of 
millions  of  people  of  the  United  States,  who  possibly  other¬ 
wise  would  know  nothing  wbntever  about  them. 

Q.  Does  it  often  hnppen  that  a  regular  dramatic  pro-  „ 
dnetion  which  has  appeared  upon  the  so-called  legitimate 
stuge,  has  also  been  enacted  before  the  motion  picture  cam¬ 
era,  and  reproduced  on  the  motion  picture  stage?  A.  Yes, 
that  also  has  been,  and  is  being,  done. 

Q.  Is  any  knowledge  of  stugecraft,  ns  applied  to  the 
legitimate  stage,  requisite  for  the  motion  picture  produc¬ 
tion  after  the  play  has  been  selected?  A.  Absolutely.  The 
motion  picture  director  has  to  be  just  as  skilful  in  sizing 
up  and  properly  plucing  a.  dramatic  situation,  ns  on  the 
regular  stage.  He  has  to  also  keep  in  mind  at  nil  times, 
the  limitations  of  the  Aeld  of  the  camera,  and  must  keep  4 
his  actors  at  the  proper  distance  away  from  the  camera. 

And  he  also  1ms  to  be  familiar  with  the  conditions  of  light, 
so  ns  to  secure  the  proper  photographic  effect  But  in  a 
dramatic  sense,  his  work  is  identical  with  the  work  of  the 
ordinary  stage  director. 

■  Q.  And  the  ultimate  object  is  to  produce  the  same  ef¬ 
fect  upon  the  motion  picture  audience  ns  is  produced  in 
a  regular  theatre?  A.  That  is  the  real  object.  . 

Q.  To  what  extent  do  the  producers  of  motion  pictures’ 
have  stock  companies  of  actors,  and  actresses  in  their  ein- 


SE 


1014  Frank  L.  Dyer,  Direct  Examination. 

1  ploy?  A.  All  the  licensed  producers,  ns  far  ns  I  know, 

employ  from  one  to  ten  regular  stock  companies  for  the  A) 

purpose  of  making  the  motion  picture  plays. 

Q.  And  the  same  thing  is  true  of  the  unlicensed  pro¬ 
ducers,  is  it  not?  A.  As  far  ns  I  know,  it  is. 

Q.  From  what  class  of  persons  are  these  stock  com¬ 
panies  recruited?  A.  In  a  large  measure  from  actors  from 
the  regular  stage.  There  is  a  constant  shifting  back  and 
forth  of  actors  from  the  regular  stage  to  the  motion  pic-, 
ture  stage,  and  vice  versa,  and  constant  shifting  of  actors 
from  one  motion  picture  company  to  another,  in  fact, 

2  the  motion  picture  work  is  looked  upon  hy  the  actors  ns 
simply  one  of  the  opportunities  for  employment. 

Q.  Is  it  quite  common  for  stars  in  the  theatrical  world 
'  to  accept  engagements  on  the  motion  picture  stage?  A.  Tes. 

This  is  getting  to  he  quite  common.  Sarah  Bernhardt, 

James  K.  Hnckett,  Mrs.  Fiske,  Charles  Hnwtrey,  are  all 
well  known  stars,  nnd  they  have  appeared  in  motion  pic¬ 
tures.  ■  . 

Q.  Will  you  describe  a  motion  picture  studio  and  its 
equipment?  A.  Motion  picture  studios  are  of  throe  classes. 

First,  the  outdoor  studio;  second,  the  daylight  studio;  and 
8  third,  the  so-called  dark  studio.  With  an  outdoor  studio, 
there  is  simply  a  platform  out  of  the  sunlight  with  the 
stage  sets,  properties,  and  scenery,  and  the  action  takes 
place  out  of  doors,  the  photographing  being  done  by  sun¬ 
light.  These  studios,  of  course,  are  used  only  in  good 
weather,  and  for  a  limited  number  of  hours  each  day.  They 
are  more  common  in  places  like  Jacksonville  and  Los  An¬ 
geles,  where  the.  climatic  conditions  are  favorable.  The 
daylight  studio  is  a  large  building,  somewhat  like  an  im¬ 
mense  conservatory,  with  an  extensive  stage,  nnd  a  glass 
4  roof,  and  ordinarily,  glass  sides.  Generally,  daylight  stu¬ 
dios  are  equipped  with  powerful  arc  lights  for  the  purpose 
of  supplementing  the  sunlight  in  overcast  weather,  or  for 
working  at  night,  or  for  accentuating  certain'  lighting  ef¬ 
fects  which  would  be  impossible  for  sunlight.  For  instance, 
the  glare  from  a  fireplace.  These  daylight  studios  are  pro-  A. 

vided  with  screens  made  of  thin  cloth  to  be  pulled  over  the 
glass  top  for  the  purpose  of  diffusing  the  light,  exactly  as 
in  an  ordinary  portrait  studio.  The  third  class,  or  dark 
studio,  is  very  similar  to  the  daylight  studio,  except  that,  it 
is  a  large  closed  room  lighted  entirely  by  artificial  means. 


Frank  L.  Dyer,  Direct  Examination. 


1015 


A  modern  studio  is  equipped  with  a  scene-painting  depart¬ 
ment  for  the  manufacture  of  scenery,  nnd  a  large  property 
room  is  also  provided,  in  which  a  multitude  of,  the  com¬ 
moner  properties  are  kept,  also  costume  room,  carpenter 
shop,  and  other  necessary  accessories. 

Q.  Dressing  rooms  for  the  actors  nnd  actresses?  A. 
Dressing  rooms  for  the  actors  and  actresses,  nnd  rooms  in 
which  the  directors  work,  nnd  so  forth.  I  have  lmd  in  mind 
in  answering  your  question,  particularly  the  Edison  day¬ 
light  studio,  but  I  have  visited  the  studios  of  most  of  the 
licensed  manufacturers,  and  the  same  description  applies 
substantially  to  all  of  them.  Sometimes  the  daylight  studio 
will  be  combined  with  a  dark  studio  in  a  building  of  several 
Jloors,  the  upper  floor  being  enclosed  in  glass  so  as  to  com¬ 
prise  the  daylight  studio. 

Q.  After  the  motion  picture  play  has  been  selected, 
what  is  done  in  the  way  of  providing  costumes  and  scenery, 
and  properties,  and  so  forth?  A.  Ordinarily  the  director 
who  is  assigned  to  put  on  the  play,  after  having  studied  the 
play  very  carefully  so  as  to  thoroughly  understand  it,  pro¬ 
vides  that  the  proper  scenes  shall  be  painted,  giving  the 
directions  to  the  scene-painting  department,  and  also  pro¬ 
vides  for  the  nccessnry  costumes  and  properties.  He  gen¬ 
erally  explains  the  plays  to  the  actors  who  may  have  been 
selected  to  perform  the  parts  nnd  explains  to  them  what 
characters  they  are  to  take,  and  how  they  are  to  be  made 
up.  The  making-up  of  a  motion  picture  actor  is  the  same 
substantially  as  on  the  regular  stage,  except  that  the  make¬ 
up  is  somewhat  accentuated,  and  also  regard  has  to  lie 
taken  to  the  proper  photographic  quality  of  certain  colors. 
For  instance,  photographically,  blue  shows  almost  white, 
and  red  is  almost  black,  so  that,  a  great  deal  of  rouge 
which  might  he  used  on  the  regular  stage,  would  be  avoided 

in  the  moving  picture  art,  as  it  would  appear  black. 

Q.  It  is  customary  to  rehearse  the  actors  and  actresses 
in  their  parts  before  the  camera  is  brought  into  play?  A. 
Oh  yes.  The  rehearsing  is  very  carefully  done,,  because 
upon  that  depends  the,  whole  success  of  the  final  perform¬ 
ance  The  rehearsing  of  a  motion  picture  play  is  rela¬ 
tively  as  carefully  done  as  on  the  regular  stage.  It  takes 
sometimes  all  day  to  get  the  actors  properly  rehearsed  to 
take  a  scene.  And  in  the  case  of  some  scenes  involving  a 


"I 


1010  Fkank  Jj.  Dyeu,  DiJiHCT  Examination. 

1  great  many  actors,  it  may  take  several  days  to  rehearse  the  j 

scene.  9 

Q.  During  this  rehearsal,  do  the  actors  speak  their  respec¬ 
tive  parts,  or  is  the  action  entirely  pniitomime?  A.  A  cer¬ 
tain  amount  of  talking  is  done,  principally  for  the  purpose 
of  making  stroug  sceues  more  convincing.  The  actors  do 
not  have  long  involved  dialogues  the  same  as  on  the  regu¬ 
lar  stage,  hut  they  generally  are  talking— •generally  arc  say¬ 
ing  something  along  the  lines  of  the  actions  that  they  are 
trying  to  portray. 

Q.  In  some  of  the  motion  picture  dramas,  is  any  din- 

2  logue  written  for  the  performers  by  the  author,  or  is  the 
scenario  entirely  descriptive  of  the  dramatic  action?  A.  It 
is  quite  a  common  thing  for  scenario  writers,  in  order  to 
emphasize  the  strength  of  certain  scenes,  to  prepare  simple 
dialogues  for  the  characters  to  speak,  although  this  is  not 
always  the  case. 

Q.  Then  the  motion  picture  camera  is  not  brought  into 
play  until  after  the  company  lias  been  rehearsed,  and  their 
rehearsal  is  satisfactory  to  the  stage  manugev  or  director, 
is  that  correct?  A.  That  is  correct.  I  might  say  that  the 
motion  picture  camera  is  the  first  observer  of  the  finished 
performance. 

Q.  And  up  to  that  point,  no  mechanical  appliances  have 
been  introduced  whatever,  have  they?  A.  Except  such  ns 
might  appear  as  mechanical  properties;  hut  nothing  has 
been  introduced  in  a  mechanical  sense  that  differentiates 
the  motion  picture  play  up  to  that  point  from  the  regular 
dramatic  performance. 

Q.  If  in  the  development  of  the  negative  motion  picture, 
any  defects  are  found,  either  of  acting  or  photography,  wlmt 
happens?  A.  The  scene  is  taken  over  again,  the  actors  be- 
4  ing  again  required  to  enrict  the  scene,  and  a  new  photo¬ 
graph  being  taken  of  it. 

Q.  That  involves  considerable  loss  and  expense,  does  it 
not?  A.  That  involves  a  very  great  loss,  because,  although 
the  loss  of  film  may  not  be  very  much,  yet  the  loss  in  time 
of  the  actors  amounts  to  a  great  deal.  w 

Q.  Is  it  ever  the  practice